If your startup is looking for funding of any kind, you should consider Private Limited Company.
In this episode of eLagaan Whiteboard Friday, the eLagaan team explains why most investors prefer a pvt. ltd. company over any other form of business structure. Some of the benefits of pvt. ltd. company includes option to issue shares, preferential shares, move one class of shares to other. The video also talks about why investors want share holder agreement, drag along, tag along, how it could allow employees to have employee stock options (ESOP) etc. Also it allows the investors to have a good exit option including IPO or sale out. It also talks about why investors may not want majority stakes in early stage startups.