If you’ve ever had to sell anything, you know that the deal is never done until it’s done. Well, in finance, it’s not done until the money is in the bank and all the required documents have been fully executed by all parties to the transaction.
Now, let’s talk about what it takes to get an interested investor through to a close. They liked your one-pager, you secured the pitch, they liked your pitch, and you received a term sheet. You’ve made it, or so you thought. If you are dealing with a more sophisticated investor or even a less sophisticated investor, you are about to go through “due diligence”. No checks are getting written and no wire transfers initiated until you get through the gauntlet known as due diligence.
Due Diligence
Due diligence is the deep dive into everything about your company, your product, your business model, your go-to-market strategy, your financial projections and the rationale behind every key assumption made within it, along with a comprehensive sensitivity analysis done by an ivy league MBA. Of course, a comprehensive set of financial statements and tax returns will be needed as well. If you make it through all of this, then it’s time for the legal due diligence, looking at all of your governing documents, your securities documentation, all of your key customer contracts, employment contracts, contractor contracts, and intellectual property documentation. Whew! Hope you were ready for that exercise. If not, you probably are still not closed on your round.
Documentation
Next is the investment documentation and making sure you’ve met all the conditions to affect an initial closing. Did you set a minimum for the round and have you reached that amount to affect your close? Are you getting pushback on some of the key terms and have to bring in your legal counsel to work through a set of amendments and changes that now require board approval? Finally, signatures are in.
Funding
Did you provide the wire instructions? Did they get to the person who will be executing the wire transfer? Did the issuing bank require a missing piece of information to complete the wire? Just some of the items that might affect your close.
Finally, now finally, you can know you have closed your investment…May you now successfully close out the rest of your round of financing.
Want to get prepared to raise capital successfully?
Download our Free Fundraising Checklist Here: https://thechangeagenthub.net/fundraising-checklist
Once you receive the checklist you’ll be redirected to a video walkthrough so you can use this checklist most effectively. And you’ll also be invited to check out our 9-step fundraising preparation roadmap with detailed information called Impact Incubator Immersion. This program is the exact process all our impact clients have used to raise capital successfully.
