Case Study: Navigating a Delaware Flip for Early-Stage Fundraising

Overcoming Structural Challenges for Seed Investment Success

A newly established early-stage tech startup faced several hurdles while preparing for a $2.5 million seed investment from their new US-based investors. These investors favoured a US TopCo structure to align with their familiarity of tax implications and conform to market norms. Ahead of the fundraising, the two founders, holding 54% and 46% ownership respectively, sought to restructure the company’s ownership to better position themselves for the investment.

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FD’s Approach

Our tailored approach provided a comprehensive, tax-efficient solution to restructure the business and establish a US TopCo, with appropriate consideration for the founders’ share capital and likely future dilution.

1. Delaware Flip Consultation

• Guided the founders through the process, weighing pros and cons.
• Shared timelines and costs to ensure alignment with client needs.
• Obtained clearance for Capital Gains Tax (CGT) and Stamp Duty to prevent additional tax burdens.

2. Cap Table Reorganization

• Reorganized the ownership structure from 54–46% to 51–49%, reflecting the desired split between the two founders.
• Delivered clear guidance on share valuation and associated tax liabilities.
• Ensured the restructure met tax efficiency standards while protecting founder equity.

3. Efficient and Quick Turnaround

• Executed the full process from consultation to completion in just 3 weeks.
• Delivered a clear, actionable roadmap that addressed all identified issues swiftly and efficiently.

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Comprehensive Solutions for Investment Readiness

By addressing key tax risks, securing necessary clearances, and optimizing the cap table, we positioned the company for successful fundraising and future growth.

• Risk Mitigation: Addressed key tax risks and secured CGT clearances in four days.
• Investor Alignment: Completed the Delaware flip to meet US investor expectations, enabling the $2.5 million seed investment.
• Cap Table Structure: Educated founders on the flip implications and facilitated the setup of the US TopCo with the intended structure.
• Speed and Expertise: Delivered an end-to-end transaction in 3 weeks, thanks to our experience in similar cases.
• Cost Efficiency: Provided a sensible, logical approach that kept costs low—ideal for a pre-funded startup.

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Ready to navigate your own Delaware flip or early-stage restructuring?
We’ve got the experience and insight to get you there—quickly and efficiently.