These multi-company organizations are almost always a bad plan. And even if they weren't, all investors think they are, so this sort of thing is a big red flag.

Let's say you have developed your own programming language/infrastructure, such as Arc or GOAL or whatever. You want to use your tools for a new venture because they give you a lever your competition doesn't have. On the other hand, if the venture doesn't work out, you don't want your language/tools to be part of the liquidation, so you are not deprived of them in the future.

This is impolitic, but if you were starting a new venture and Arc were ready to be used in production, would you want to put it into the new company and, if not, how would you handle investors? This is a little more than hypothetical since you are using Arc in Ycombinator business, but it seems like a different situation than when forming a company with investors you barely know.

I would make the language separate from the company, drawing the line perhaps at libraries specific to the company's project.

Thanks, that is good to know. So if we create a new C corp with our new application and build in an API, then create an add-on service with our original LLC later that can add value to the new application, the investors would be less worried?

If you're creating a corporation, why not just disband the LLC? Why keep two company structures?

The issue is that we have a code base for the first company (Coding started about 6 years ago) that we want to develop into a different and much bigger product. The problem is much harder than our current startup, and we wanted to use the startup to help finance the bigger problem. We want to leave open the option of selling the startup and don't want to risk having to give up the legacy code and ideas which we think could be a dramatically bigger company. (The first company owns all that code). Once we develop the first ideas under the LLC further, we would have to convert it into a C Corp before going for investment. In the meantime, the LLC can own that code at low expense.

Well, you know more about your situtation than I do, so I'm not going to second-guess your strategy. But this does sound a little complex -- too complex for YC News to be much help. A $200 consultation with a lawyer might prevent a big headache later.

Good point - can anyone recommend a good lawyer who is not outrageously expensive?