There are many “technical” reasons why an LLC is not an investible startup company, not in the least since profit distribution at the end of the year extracts funds from a company – an unacceptable stance to investors. Funds that should instead be kept on the balance sheet.
Moreover, an LLC is a company structure generally used for companies with rather moderate growth to keep profits up, not the deep-dive required to build unique proprietary technology for a high-growth company that conquers a new normalization of truth from an initial valley of general disbelief.
The good news is that an LLC can easily be converted into a regular company, so the initial structure of the LLC should not be a deterrent to having investor discussions. Just be aware the company re-incorporation will be made one of the investment conditions.
The first startup I ran did precisely that to sell six years later for over $100M, while we also converted the company from a services company to a product company — no small feat, but with our guidance doable.
