How to Close a Funding Round

How to Close a Funding Round

March 10, 2020 by investor

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.

After you’ve built your fundraise campaign and your list of interested investors, it comes time to close the funding round.

 

Here are some pointers for closing: 

Sort and prioritize your list of target investors.

Compile your diligence documents so they are ready to go and make sure the investors know the diligence box, also called a data room, is ready and available.

If the diligence box has sensitive information that requires an NDA, consider having two versions of it — one confidential and the other non-confidential.

This allows you to offer your diligence to move the process along without giving out sensitive information.

Setup a call to walk the investor through it so they know where everything is and find out if they need more information.

Communicate a closing is coming up and always emphasize the close date.

Update the investors on the outstanding interest in the deal.

Provide updates to investors showing funds raised is increasing slowly but surely as you approach that date.

If you don’t communicate an increasing raise amount, then most will not take the close date seriously.

For each investor discussion take the conversation to the next level as follows:

Interest — would you invest or not?

Amount of investment — what number do you have in mind?

Committed — can you commit to that number.  If not, what holds you back from committing?

Date of investment — what date before the close can you commit to sign the docs and wire the funds?

In each email or call, propose the date and time for the next call to keep the fwup going in a timely manner.

Communicate the following raise will be at a higher valuation — much higher. If the investor is going to commit they will do so for the better valuation.

Finally, offer an incentive to come in on the target close date — redemption rights, warrants, etc.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

 

Let’s go startup something today.

 

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Copyright (c) 2020, Hall Martin and investorconnect.org. All rights reserved.

Disclaimer:
Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.

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