Replit

The transition typically happens at the Series A, when the round size exceeds roughly 5 million US dollars or when sophisticated lead investors require board seats and full preferred-stock protections. Replit followed this pattern: YC SAFE, additional SAFE checks, then a priced Series A. SAFEs are cheap (under 1k US dollars in legal fees) and fast (days, not weeks), but they accumulate dilution that lands all at once at the priced round. Founders should model SAFE conversion against several Series A scenarios before signing the next SAFE.

Every institutional VC writing a Series A check requires Delaware. The Delaware Court of Chancery has decided thousands of preferred-stock cases over more than a century, giving founders and investors predictable outcomes on liquidation preference, anti-dilution, and drag-along disputes. Section 1202 QSBS treatment requires a domestic C-Corporation, which Delaware is the default for. Wyoming's LLC privacy is irrelevant once a cap table fills with named investors, and a pre-Series-A redomicile to Delaware costs legal fees and resets the QSBS five-year holding period.

Every employee, contractor, and material contributor signs a Confidential Information and Invention Assignment Agreement (CIIAA) at hire that assigns all work-related IP to the company. The certificate of incorporation authorizes the company to hold IP. Trademarks (wordmark, logo, product names) are filed at the USPTO with the company as registered owner. Source code and key algorithms can additionally be protected by trade-secret law, copyright registration, or patents depending on materiality. The CIIAA should be signed before the employee writes any code and should explicitly cover prior-work carve-outs.

Four-year vesting with a one-year cliff is universal. The first 25 percent vests on the one-year anniversary; the remaining 75 percent vests monthly over the next 36 months. Acceleration is typically double-trigger (acquisition plus involuntary termination within 12 months post-close), not single-trigger - VCs strongly resist single-trigger because it disrupts acquirer retention plans. Founders must file 83(b) elections within 30 days of receiving restricted stock to elect ordinary-income tax at issuance rather than at each vesting tranche, which can save substantial tax dollars later.