A verbal commit is an investor’s non-binding indication they intend to participate in your round at a proposed size — useful for momentum, risky if treated as cash in bank.

How it works

Fundraising often progresses in layers:

1. First meetings and partner presentations
2. Verbal commits — “We’re in for $2M pending diligence”
3. Term sheet signed with a lead
4. Legal docs and wire transfer

Verbal commits help founders signal heat to other investors. Leads may ask who else is in before anchoring. Commits can be soft (partner interest) or firm (IC-approved, counsel engaged) — the label rarely distinguishes, so founders should ask directly.

Investors revoke verbal commits when diligence surfaces issues, internal priorities shift, or the lead terms change economics. No penalty unless a signed letter exists — rare at venture stage.

Best practice: track commits in a spreadsheet with status (verbal, term sheet, wired), contact owner, and conditions. Update the board honestly; overstating commits destroys credibility when leads call references.

Why it matters

• Founders: Plan runway assuming verbal commits may not close. Do not pause other investor conversations until at least a signed term sheet with a credible lead.
• Investors: Verbal commits let firms hold allocation while completing diligence — but reputational damage follows if firms flip without cause after public signaling.

Common mistake

Announcing a round as “fully committed” based on verbals alone. Until wires land, capital is not secured — downstream hires and vendor contracts should reflect that.

Related ideas

See also wire, term sheet, and written consent.