VC & PE Glossary
What Is Wire?
Updated
Definition
A wire — wire transfer — is the electronic movement of funds between bank accounts, marking the moment investment capital actually lands in a startup's account at round close.
Useful for: Founders, Investors
Wire — short for wire transfer — is how investment dollars move from investor accounts to the company at closing, turning signed documents into spendable cash.
How it works
Closing sequence:
- Sign stock purchase agreements and ancillary docs
- Company delivers closing certificates (good standing, secretary certificate, etc.)
- Investors initiate wires per side letter instructions — often same-day via Fedwire or SWIFT internationally
- Company confirms receipt; board approves share issuance
Founders provide wire instructions from the company’s bank — verify routing numbers verbally to prevent fraud. Partial closings happen in tranched rounds; each tranche wires on milestone satisfaction.
For fund LPs, capital calls culminate in wires to the fund, then fund wires to portfolio companies — two-hop liquidity.
Delays stem from missing signatures, OFAC checks, bank cutoffs, or holidays. Verbal commits are not wires — only the transfer counts for runway math.
Why it matters
- Founders: Announce hires and vendor prep after cleared funds, not at term sheet. Maintain a few weeks buffer for wire delays.
- Investors: Operations teams track wire dates for ownership registers and LP reporting; mistakes in amount or entity name require recall and re-send.
Common mistake
Spending against a term sheet before wires clear — if a investor fails final compliance, you may face a cash gap with obligations already made.
Related ideas
See also verbal commit, capital call, and closing checklist.
Related terms
- Capital Call — A capital call is a formal notice from a fund GP to LPs to wire a portion of their committed capital — for investments, management fees, fund expenses, or follow-on reserves.
- Verbal Commit — A verbal commit is an investor's informal promise to invest a stated amount in an upcoming round — not legally binding until term sheet and closing documents are signed.
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Common questions
Short answers for founders, LPs, and operators