Glossary · Fundraising process · Updated
Closing is when a round becomes effective: final documents are signed, the capital increase is recorded, then the money is transferred. It happens several weeks after the term sheet, once due diligence is complete and legal documentation is finalised.
The stretch between term sheet and closing is systematically underestimated. It consumes a lot of management time on invisible work: answering lawyers' questions, producing certificates, chasing signatures from scattered shareholders. Meanwhile the company must keep performing, because a commercial slowdown will show up in the figures being shared.
Money does not arrive the moment you sign. Funds usually transit through a blocked account while the capital increase is recorded and filed. Allow one to two extra weeks between signature and cash actually being available, and build that into the cash plan.
Legal fees are a negotiation point in their own right. It is common for the company to bear the investor's counsel fees on top of its own, often up to a negotiated cap. On a seed round the total is material and belongs in the use of funds.
Example: a seed closing timeline
A €1.5M round, counted from term sheet signature.
| Day 0 | Term sheet signed, 45-day exclusivity begins |
|---|---|
| Day 30 | Due diligence complete |
| Day 45 | Shareholders' agreement and amended articles finalised |
| Day 55 | Shareholder meeting approving the capital increase |
| Day 60 | Funds paid into a blocked account |
| Day 68 | Filing complete and funds released |
| Total after term sheet | about 10 weeks |
| Cumulative legal fees | €15,000 to €40,000 depending on complexity |
Ten weeks from term sheet to usable cash. That is why you never start a raise with under six months of runway: signing is not the end of the road.
The common mistake
Treating the term sheet as a done deal and easing off commercially. The following weeks' numbers are watched, and a dip during due diligence gives the investor a legitimate reason to reopen terms.
Frequently asked questions
How long between term sheet and closing?+
Six to twelve weeks in Europe on a seed. The timing depends mostly on dataroom quality and on how many shareholders must sign: a cap table with twenty small holders mechanically lengthens the signature phase.
Who pays the legal fees of a round?+
Each side pays its own advisers, but it is common for the company to cover part of the investor's counsel fees, up to a cap set in the term sheet. That cap is negotiable and worth discussing before signing.
Related terms
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