The Art of Startup Fundraising

13Closing the Deal

All of your hard work, preparation, and research has led you to this one pivotal point of your entrepreneurial career—closing the deal.

No matter how well you have pitched your business to investors, it is always possible for a deal to fall through, even at the last minute. This fact is not mentioned here to alarm you, but to instead keep you vigilant and to ensure that you continue to make appropriate decisions, regarding how you present your company to investors, right up until the last possible second.

The Importance of Urgency

A business deal should not be rushed into quickly without forethought; however, your preparations and any required due diligence should be in order by the time you have come to completing the deal.

Urgency at this stage is key for a number of reasons, which include:

• Cold feet: The more negotiations are drawn out, the greater the chance of investors getting cold feet; this is especially true when an agreement has been made in principle but has not yet been signed. If there is some impediment to closing the deal, such as securing patents, legal agreements with fellow founders, or other administrative matters, this can set alarm bells ringing in the minds of prospective investors. At this stage a quick conclusion is desirable. The more an investor has to think about a deal they have preliminarily agreed to, the greater the chance of the investor having cold feet and taking the offer off the table.
• Options: Another danger of dragging ...