Delaware is a great state for: 1) large corporations, 2) boards of directors of corporations of any size, and 3) the investors who control the board of directors for a corporation. Delaware is also a great state if you expect to have lots of litigation over your corporate structure or in regards to corporate management activities.
Delware is a horrible state for anyone else, especially minority shareholders. The reason large companies and VCs love Delaware is because it allows them to run roughshod over minority/non-controlling investors in ways that are illegal in almost every other state. (This is also the premise behind the investing maxim, "never vote against management".)
Furthermore, incorporating in Delware does not shield you from legal liability from other states. For example, if you do business in California, you will generally be subject to California laws. You can contract jurisdiction to Delaware for certain legal items, but not all (for example, employment issues). This is relatively easy to do for consumer-facing contracts, but most locally incorporated businesses will reject jurisdiction clauses from non-essential vendors and clients.
Delware is a horrible state for anyone else, especially minority shareholders. The reason large companies and VCs love Delaware is because it allows them to run roughshod over minority/non-controlling investors in ways that are illegal in almost every other state. (This is also the premise behind the investing maxim, "never vote against management".)
Furthermore, incorporating in Delware does not shield you from legal liability from other states. For example, if you do business in California, you will generally be subject to California laws. You can contract jurisdiction to Delaware for certain legal items, but not all (for example, employment issues). This is relatively easy to do for consumer-facing contracts, but most locally incorporated businesses will reject jurisdiction clauses from non-essential vendors and clients.