If you have read almost any startup advice, you have seen the phrase Delaware C-Corp. A large share of US venture-backed startups incorporate in Delaware even when no founder lives there. There are concrete reasons for this, not just habit.
Predictable, well-developed law
Delaware's General Corporation Law is one of the most developed bodies of corporate law in the world, refined over more than a century. Because so many companies are incorporated there, almost any situation a startup might face has likely already been addressed, which makes outcomes more predictable for founders, investors and lawyers alike.
The Court of Chancery
Delaware has a dedicated business court, the Court of Chancery, where experienced judges — not juries — decide corporate disputes. This specialised court, and the large body of written decisions it has produced, means corporate questions tend to be resolved by people who handle them constantly, with results that lawyers can anticipate.
Founders do not choose Delaware because it is exotic. They choose it because it is boring in the best way: predictable, familiar, and expected.
Investor familiarity
This is often the deciding factor in practice. Venture investors are deeply familiar with Delaware corporations, their standard documents, and their rules. Incorporating in Delaware removes friction from fundraising, because investors do not have to learn an unfamiliar state's quirks to write a cheque. Many investors expect, or require, a Delaware C-Corp.
Is it always the right choice?
Not for everyone. Delaware incorporation adds an annual franchise tax and the cost of a registered agent, and if you are not raising venture capital, a simpler structure in your home state may serve you better. The Delaware C-Corp is the default for companies on a venture-backed path, not a universal rule.
This is general information, not legal or tax advice. The right entity and state depend on your specific plans, so confirm the choice with a lawyer before you incorporate.