You hear Delaware by default, and by all accounts, it makes sense. It has the courts, the case law, and investor familiarity. But Delaware is not the only choice - some managers use Wyoming or Nevada. The right call depends on your investors, your budget, your tax posture, and how much predictability you want from the courts. This guide compares the three states most relevant for first time and emerging venture managers. It covers what it costs to set up, what you file each year, and when a state is the better fit. It closes with a short map of non-US options many managers use alongside a US vehicle.
Most venture funds use a limited partnership for the main fund, with the general partner sitting in a separate LLC (limited liability company). In order to set up a VC fund, you file the entities with a state, appoint a registered agent, sign your fund documents, get EINs (Federal Tax IDs), and open accounts. Thereafter, you raise capital under Regulation D, then you file a Form D notice within fifteen days after the first sale. If you keep the offering private, you rely on Rule 506B (which means you don’t have to register the offering with the SEC). If you plan to promote the offering in public, you rely on Rule 506C and verify that every buyer is accredited. Finally, your state notice filing processes follow the investor’s home state. They sit outside your choice of formation state and add small fees per state. The SEC keeps clear guidance on all of this.
Your formation state affects filing fees, annual taxes or fees, and court predictability, and this is where we get to the heart of today’s conversation - which jurisdiction should you aim to establish your fund?
Delaware remains the market standard for US venture funds. Investors and their legal counsel alike know it well. The Court of Chancery and the alternative entity statutes allow you to write the partnership agreement with wide freedom. Courts enforce the agreement as written and preserve the implied covenant of good faith and fair dealing. This gives both sponsors and investors predictability on governance and dispute outcomes.
Forming the fund is straightforward: you file a Certificate of Limited Partnership with the Division of Corporations at a cost of $200. Delaware offers same-day and twenty-four-hour expedited services for extra fees. You will also form the GP LLC. The state publishes fees and expedited options in detail. To that end, annual costs are clear. Every Delaware limited partnership pays a flat annual tax of $300 due on 1st June with late payment bringing a $200 penalty plus interest. Furthermore, there is no annual report for LPs.
Why Delaware: The motivation for Delaware is simple. The law on limited partnerships and LLCs is mature. Courts accept tailored fiduciary duty language in the agreement, subject to the implied covenant. That reduces uncertainty and keeps disputes inside the four corners of the contract. Furthermore, many service providers in the space are set up for it. Many model LPAs assume Delaware law, so diligence and closings run smoothly. The main drawback is cost. The flat annual tax is not high for a fund, yet it is more than budget states, and expedite services add to formation spend if you are in a rush.
Fit for: For those with breadth of operations, Delaware is a good fit. Additionally, if you expect institutional LPs or large family offices across many states, or if you want the most tested case law for bespoke governance, choose Delaware.
Wyoming appeals to managers who want simplicity and low fees. Many small partnerships and holding companies pick it for that reason. It can suit a seed-stage manager with a friendly investor base and a tight budget.
The fund formation process is light. You file a Certificate of Limited Partnership with the Secretary of State and appoint a registered agent. The state runs an online portal that handles filings and annual reports.
Annual upkeep uses an annual report licence tax with a minimum of $60. Once above a threshold, the fee scales with assets located and employed in Wyoming at a rate of two-tenths of one million per dollar. The annual report is due each year in the month of formation. Additionally, if you file online, the payment processor adds a small convenience fee.
Why Wyoming: Privacy at the state level is stronger than in many states for LLC ownership on public records. That can help if you use a Wyoming LLC for the GP or other parts of the stack. You still meet federal and bank level checks, so treat state privacy as limited. Investor familiarity is lower than Delaware, and some LP counsel will ask for a move to Delaware before they sign.
Fit for: The best fit is a local or close network fund where every dollar counts (typically smaller funds with smaller management fee amounts to work with) and investors are willing to accept a non-Delaware domicile. Alternatively, if you have significant reason for privacy concerns, Wyoming is a strong contender.
Nevada provides a simple formation process and a clear annual filing rhythm. It has no state corporate income tax for typical fund entities. It also has dedicated business court dockets that focus on commercial disputes. The trade-off is a state business licence fee and a required annual list for general partners, so ongoing costs sit between Wyoming and Delaware for many small managers.
Forming a Nevada limited partnership starts with a Certificate of Limited Partnership. The statutory filing fee is $75. The Secretary of State publishes the fee in the statute and provides packets and online filing through its commercial recordings portal. Soon after formation, you must file the initial list of general partners and pay the fee. Nevada law sets this fee at $150 for the initial list and the same for each annual list. The list is due each year in the anniversary month. A late list triggers a $75 penalty.
Every Nevada entity other than a corporation must maintain a state business licence. The fee is $200 each year. The renewal falls on the last day of the anniversary month. A late licence draws a $100 penalty. You can file both the annual list and the licence renewal together through the state portal.
Why Nevada: Nevada’s courts include business court dockets within the Eighth Judicial District in Clark County and the Second Judicial District in Washoe County. The system has matured over many years and the Supreme Court is now taking steps to enhance a statewide business court framework. This gives sponsors and LPs a forum with judges who focus on business disputes, though it is not the same specialist equity court as in Delaware.
Fit for: Where Nevada fits best is a manager who values a light state tax posture, wants a recognised business court forum, and is willing to accept the extra annual list and licence costs. It can be a clean fit if your LP base has a Nevada link, or if you combine a Nevada GP LLC with a Delaware or Nevada fund and want uniform state admin inside Nevada.
The process of selecting a jurisdiction starts with your investors. If you plan to raise from pensions, endowments, fund of funds, and large family offices across many states, pick Delaware. It cuts friction with investor counsel. The case law on alternative entities is deep, and courts are consistent in enforcing partnership agreements as written, with the implied covenant preserved. That clarity reduces negotiation time and speeds closing.
If your investor base is local and budgets are tight, run the numbers on Wyoming and Nevada. Wyoming keeps formation and annual costs very low. Nevada charges a modest filing fee to form, then an annual list and a state business licence. For some managers, that is still a fair trade for a no state income tax setting and access to business court dockets. Be candid with LPs about why you chose the state. If you plan to market widely or pursue institutional money later, weigh the risk that counsel asks you to move to Delaware. Moves are possible, but they add cost and document work.
Then think about your forum for disputes. Delaware’s Court of Chancery is the gold standard for business disputes. Nevada’s business court dockets aim to deliver expertise and speed for commercial matters and are moving toward a more formal statewide framework. Wyoming does not match either for volume of fund cases, which matters less for a close first fund but more as your LP base grows.
Finally, look at recurring costs rather than only the first filing. A Delaware LP pays a $300 annual tax due on one June, with no annual report. A Wyoming LP files an annual report and pays at least $60 based on assets located in the state. A Nevada LP files an annual list at $150 and keeps a state business licence at $200, both due each year in the anniversary month, with set late penalties. None of these numbers should make or break a venture fund. For a very small first-time manager, they still matter.
Many US managers add a non-US vehicle to serve non-US and US tax-exempt investors. Cayman and Luxembourg are the most common, though Jersey and Guernsey work well for UK and Channel Islands networks. Additionally, Singapore’s Variable Capital Company has grown across Asia.
The Cayman Islands remains the default for a master or parallel fund that is tax-neutral for non-US and US tax-exempt capital. Closed-end private funds register with the Cayman regulator under the Private Funds Act. Registration should be in process within 21 days after accepting commitments and before drawing capital. A Cayman private fund appoints a Cayman-approved auditor and meets annual filing and audit duties. Most managers use an exempted limited partnership for the fund and pair it with a Delaware LP in a master feeder or a parallel.
Luxembourg offers the SCSp, a special limited partnership without legal personality. It runs off a partnership agreement and is flexible on governance and economics. It can be unregulated or sit under regimes such as the reserved alternative investment fund, and it works with an AIFM if you need an EU marketing passport. Limited partner identities are not published on the public register, which helps privacy. This is the main European choice for global managers raising funds in the EU.
Jersey and Guernsey give you reputable common law environments and fast routes for private funds. Jersey’s Expert Fund guide and the Jersey Private Fund guide set out clear paths that administrators and counsel know well. Guernsey’s Private Investment Fund regime was updated in twenty twenty five and now runs as a single streamlined route with a separate family route. Both islands connect well to the UK and global capital networks.
Singapore’s Variable Capital Company structure was launched in 2020. It allows standalone funds or umbrella funds with segregated sub-funds. A VCC must be managed by a permissible fund manager in Singapore. Company administration sits with ACRA, while anti-money laundering oversight sits with the central bank. Adoption has grown across private equity and venture capital across Asia. This is a credible hub for managers with Asia-based teams or investors.
If you are raising a standard US venture fund from a mix of institutions and large family offices, use Delaware. If you are a first-time manager raising a small local pool and every dollar counts, consider Wyoming. If you want a no-state income tax setting with an established business court docket, and you accept a higher annual filing burden than Wyoming, consider Nevada. If you have a meaningful non-US or US tax-exempt base, expect to add a Cayman partnership or a Luxembourg SCSp next to your US vehicle. Add Jersey, Guernsey, or Singapore, where your LP map points that way.
Whichever route you pick, write a short memo for your LPs that covers four things.
Once you know these, you’ll be equipped to make your decision and for the next steps that follow.
