Jan 3 2007

Can VCs Invest In S-Corps or LLCs?

Question:  Do VC and Private Equity Funds have to invest in C-Corps, or can they invest in S-Corps and LLCs?

Our Take:  Most often, C-Corps rule the day.  S-Corps can only issue one class of stock meaning that VCs and PEs can not get get the benefits of liquidation preferences and other preferred terms. 

For a complete discussion, check out a prior post on the issue.