Closing is when a transaction becomes legally binding and economic: documents execute, funds transfer, and cap table or ownership records update.

How it works

Venture rounds often have an initial close when the first investors sign and wire, letting the company operate while others join later rolling closes until a final close date. Before closing, parties satisfy conditions precedent—legal opinions, board approvals, updated charter filings, IP assignments, and sometimes regulatory clearances. On closing, investors wire purchase price; the company issues preferred stock and updates the cap table. M&A closings similarly exchange consideration for shares or assets and may include escrow for indemnities. Closings can slip when diligence finds issues, bank wires miss cutoffs, or state filings lag. Founders should not treat “signed term sheet” as closed cash in the bank.

Why it matters

• Founders: Runway planning must assume closing delays. Employee option grants and vendor contracts may wait on closed capital. Public announcements usually follow wire confirmation.
• Investors: Capital is not “called deployed” until closing completes. Fund marks and ownership percentages fix at close; side letters and pro rata rights attach then.
• Counsel: Closing binders stack signatures, wire instructions, and secretary’s certificates—errors here block the entire round.

Common mistake

Announcing a round as closed before funds settle and charter amendments file. Partial closes are real, but PR ahead of wires creates reputational and legal risk.

Related ideas

Closing agreement, conditions precedent, initial close, final close, and wire transfer mechanics sit at the end of every deal process.