Young companies frequently incorporate somewhere other than where their founders live or their customers are. The reasons are practical, and they are usually about who will invest.
Investors prefer structures they already know
Professional investors have standard documents, established precedents and legal advisers accustomed to particular corporate forms in particular jurisdictions.
An unfamiliar structure means additional legal review, unpredictable outcomes on standard protections, and cost that the investor has no reason to accept when alternatives exist.
The result is concentration. A small number of jurisdictions become defaults for venture-backed companies, and founders adopt them because raising capital elsewhere is harder rather than impossible.
Predictability matters more than the rules
What investors value is a body of decided cases that makes the consequences of a dispute reasonably foreseeable, along with courts experienced in commercial matters.
A jurisdiction with modern legislation but little decided case law offers less certainty, because how the rules will be applied in contested situations remains genuinely open.
This is why long-established commercial jurisdictions retain their position even where newer alternatives offer apparently more favourable terms on paper.
Share structures are not universally available
Venture financing relies on preference shares, conversion mechanics, option pools and defined shareholder rights, and not every corporate law framework accommodates all of them.
Where a mechanism cannot be implemented directly, it has to be approximated through contract, which is weaker and more expensive to enforce.
Founders discovering this partway through a raise face a restructuring at the least convenient moment, which is one of the more common causes of a delayed round.
Tax follows activity, not registration
Incorporating in one country does not by itself move the tax position. Where people work, where value is created and where customers are all affect what is owed and to whom.
Rules on residence, permanent establishment and transfer pricing vary substantially by jurisdiction, interact with treaties, and change over time.
Anyone treating incorporation as a tax decision generally needs professional advice in each country involved, because the answer depends on facts that differ from company to company.
Redomiciling later is costly
Changing jurisdiction after the fact typically requires a corporate reorganisation, often involving a new parent company and an exchange of shares by every existing holder.
That process needs shareholder consent, incurs professional fees, and can create tax events for individuals who had no involvement in the decision.
Which is why the choice made casually at formation, often to save time, becomes a constraint that a company carries for years afterwards.