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Delaware was the first state to approve the constitution back in 1787, and in 2021 it should be one of the first that startups consider when choosing where to incorporate.
In the years since 1787, other states have emerged as frontrunners in politics, business and finance, but Delaware is still holding its own as an attractive location for startups of all types. A new competition is now aiming to promote not only the growth of new businesses but those driven by minority groups and women.
Startup 302 has more than $200,000 in grant-based prizes available for successful applicants, and the competition is set to run until February 12. Whilst all startups are welcome to apply, those in the industries of advanced materials, agriculture, bioscience, business and financial services, and chemistry are especially welcomed according to Noah Olsen, who also explained who they were aiming to help with the project.
“This competition is focused on Delaware and the region. The kind of metric that we’re using to define underrepresented founders is focused on tech or kind of tech-enabled scalable companies that are still in the pretty early stage,” he told Delaware Public Media.
Delaware is very much a state that attracts new startups, for several reasons. One is the ease with which an idea can become a fully functioning, capable business. Starting a new LLC in Delaware is straightforward enough, but the state is not always considered as attractive as some other areas, such as New York or California. That is a fallacy as the laws governing corporations in the state are highly attractive to startups and make Delaware a great place to incorporate your company.
Why are they attractive? Because the laws are so clearly defined that there is little ambiguity when it comes to disputes. If one arises, it is almost certain what the outcome will be, thanks to noticeably clear and concise laws laid down by the state. That degree of certainty ensures startups know what protection they are offered, and what they can and cannot do without fear of somebody twisting the laws to their advantage.
That also helps to negate one of the issues we addressed in our article Jumpstart Your Startup Today. We suggested many entrepreneurs have doubts, apprehensions and fears when starting out and that can hinder their progress. In Delaware, at least the clear laws help offer some clarity to those just starting out. That is not the only reason that The First State is a great place to start your business though. For instance, they allow electronic signatures on documents and filings such as an amendment to a certificate of incorporation. The courts also allow more flexibility by deferring to the good faith of company directors and allowing corporations to indemnify its directors for losses incurred during legal action.
Whilst those aspects all attract new startups from a broad spectrum of the population, the Startup302 competition will now hope to add an attraction for those in society who perhaps feel underrepresented and held back in the wider startup world.
“When you look at statistics on those types of businesses and how they’re grown, there is a real skew in the amount of capital – venture capital – and other types of investment that goes to underrepresented founders,” added Olsen, which should pique the interest of anybody currently developing an idea they wish to turn into a startup.
Delaware was the first state to sign the constitution back in 1787 and the state which should still be right at the top of the list of where you want to incorporate your startup in 2021.