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re: S corp or LLC

Posted on 3/16/14 at 9:28 am to
Posted by Mo Jeaux
Member since Aug 2008
59518 posts
Posted on 3/16/14 at 9:28 am to
This is generally correct, but in certain industries, neither is preferable. For instance, I do some venture capital work, and they will not invest in LLCs and are generally prevented from investing in S corps. I've had to convert many LLCs to C corps to facilitate venture capital investments.
Posted by Poodlebrain
Way Right of Rex
Member since Jan 2004
19860 posts
Posted on 3/16/14 at 2:45 pm to
VC funds are concerned with the exit strategy for the investments they make. The goal for VC funds is for the companies it invests in to go public. This is the easiest, and generally most profitable, way for the VC fund to cash out of an investment. If the VC fund owns membership interests in LLCs, those interests often have to be sold at significant discounts due to lack of marketability and lack of control.
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