There are several reasons and I recently answered why here:
Here’s the summary:
VC’s and angel investors don’t like LLC’s because of familiarity/experience working with Delaware C-Corps, tax reasons, and stock structure/financing flexibility.
My recommendation is to go the Delaware C-Corp route, 9/10 times, especially if you’re a high-growth tech startup. Other structures have been around for a lot less time than C-Corporations, so angels and VC’s just deal with them less on a day-to-day basis. Furthermore, Delaware’s corporate law has been developing for a very long time, with a lot of case law and really business-oriented judges.
If you’d like to model your business structure similar to Y Combinator and other top accelerator companies feel free to check out. We’re a legal marketplace that helps startups get legal work done w/ the assistance of top on-demand business attorneys.