Founders, startup CEOs, and entrepreneurs navigating their first investment rounds, especially after signing term sheets and awaiting funds.
You’ll learn the full closing process, common pitfalls like record discrepancies, and steps for approvals and filings to minimize delays and ensure legal completion.
Key Takeaways
Closing is when the investment round completes with funds received and shares issued to investors.
Post-term sheet steps include due diligence, conditions precedent, and board/shareholder approvals.
Signing commits parties; completion transfers funds after conditions are met.
Funds flow is managed via a schedule coordinating investor transfers to company account.
Post-closing, update internal records and file share allotments with company registry.
A closing is the moment when an investment round is completed and the company officially receives the investment funds. It involves completing due diligence, conditions precedent, approvals, funds transfer, and filings after the term sheet is signed. This process takes weeks or months.
What happens after signing a term sheet?
After signing the term sheet, which outlines key commercial terms, steps include conducting due diligence on the company, agreeing the mechanics of the investment, and drafting the final investment agreement and related documents. The term sheet is not the final agreement.
What is due diligence?
Due diligence is investors reviewing the company’s records before investing, including incorporation documents, share registers, cap tables, intellectual property ownership, and key commercial contracts to confirm they match fundraising presentations.
What are conditions precedent?
Conditions precedent are required actions before closing, listed in the investment agreement, such as board approval of the investment, shareholder approval if needed, resolving due diligence issues, and updating company documents.
What must be filed after closing?
After closing, update the register of members, record share allotment, issue share certificates, and file the share allotment with the relevant company registry within the specified timeframe to reflect updated ownership.
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