Key Takeaways
- Closing a round means signed definitive documents plus cleared funds; a signed term sheet or a verbal yes is a commitment, not a close
- A SAFE round closes one investor at a time: each SAFE is signed and funded separately, usually on the Y Combinator post-money SAFE form
- A priced seed closes on a set date with a full document set, typically based on the NVCA model documents: stock purchase agreement, charter, investors' rights, voting and ROFR/co-sale agreements
- Rolling closes let a priced round add investors after the first close on the same terms, within a window the purchase agreement sets
- Form D is due within 15 days after the first sale, and most states require their own notice filing
- Verify wire instructions by phone before any investor sends money; business email compromise targets closing week
- Founders with newly vesting stock must file any 83(b) election within 30 days of the stock grant
To close a seed round, sign the definitive documents with each investor, collect funds by verified wire, and complete the post-closing filings. A SAFE round closes investor by investor as each SAFE is signed and funded. A priced seed closes all lead investors on one date, then adds others through rolling closes, with Form D due within 15 days of the first sale.
This guide is general information, not legal advice. Your counsel runs the closing; this explains what they are doing and what you need to have ready.
What does it mean to close a round?
A round is closed for an investor when the definitive documents are signed by both sides and the investor's money has cleared into the company's account.
Everything before that is a commitment. A term sheet is mostly non-binding: the economic terms are not enforceable until definitive documents are signed. A verbal "we're in" from an angel is worth what the angel's calendar is worth during closing week. Founders who announce a round on commitments sometimes learn this the hard way.
Two practical rules:
How is a SAFE round closed versus a priced round?
A SAFE round has one short document per investor and no single closing date; a priced round has a full document set and a coordinated closing.
The trade-off: SAFEs close fast and cheaply but defer the cap table question to the next round. A priced round costs more now and settles ownership, board composition and investor rights at the time of the investment.
What are the steps from term sheet to wire?
Sign the term sheet, clear diligence, finalize documents, collect signatures into escrow, release on funding, then file and update the cap table.
The sequence for a priced seed:
For a SAFE round, steps 3 to 7 collapse into: send the SAFE, receive the signed copy, receive the wire, countersign.
How do rolling closes work?
A rolling close lets a priced round add investors after the first closing on the same price and terms, within a set window and up to a set maximum.
The stock purchase agreement usually allows additional closings for a fixed period after the initial closing and caps the total shares sold. Later investors sign a joinder to the same agreements and buy at the same price. Key points:
Rolling closes are useful when angels and smaller funds move slower than the lead. They are not a way to extend a round indefinitely. Investors notice a round that keeps "closing" for months.
What filings are due after a seed round closes?
File Form D with the SEC within 15 days after the first sale, make any required state notice filings, and file founder 83(b) elections where stock is newly subject to vesting.
How do you protect the wire?
Confirm wire instructions by phone using a number you already have, and never accept a change in instructions by email during closing.
Closing week is a target for business email compromise. An attacker who sees deal email traffic sends investors "updated" bank details from a lookalike address. The money goes to the attacker, the investor is out of pocket, and your round is short.
Basic controls:
What delays a seed closing?
Most delays come from missing records, late investors and open negotiation points that should have been settled in the term sheet.
Most of these can be fixed before the term sheet. A founder who arrives at the term sheet with a clean data room, a fixed pool size and a lead investor whose fund has done seed deals before usually closes on the planned date.
Get to the term sheet with the right investors
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How long does it take to close a seed round after the term sheet?
A SAFE investor can close within days of agreeing, because the document is short and standard. A priced seed usually takes several weeks of legal work after the term sheet signs, longer if corporate records need cleaning up. Having a data room ready before the term sheet is the biggest single time saver.
What is the difference between a first close and a final close?
The first close is the date the lead and initial investors sign and fund, and the company issues the new stock. Additional investors can join later on the same terms through rolling closes, within the window and maximum set in the purchase agreement. The final close is the last of these closings.
Do I need to file a Form D for a SAFE round?
Yes, if the round relies on Regulation D, which most US seed rounds do. Form D is due within 15 calendar days after the first sale, meaning the date the first investor is irrevocably committed. Most states also require a notice filing where investors live.
Is a signed term sheet a closed round?
No. A term sheet is mostly non-binding and sets out the terms for the definitive documents. The round closes for each investor only when the definitive documents are signed and the money has cleared.
Can I close some investors before others in a priced round?
Yes. Most priced seed rounds hold a first closing with the lead and committed investors, then add others through rolling closes on identical terms. The purchase agreement sets the time window and the maximum shares that can be sold.
How do I stop wire fraud during a round closing?
Deliver wire instructions once, in a signed document from counsel, and tell investors instructions will never change by email. Ask investors to confirm by phone using a number they already have before sending. If funds go astray, contact the bank immediately and report it to the FBI's Internet Crime Complaint Center.