From Term Sheet to Closing

A signed term sheet feels like the finish line – but it is only the start of the decisive phase. Between term sheet and closing, it is decided whether an agreement in principle becomes a completed financing round.

Signing fundamentally changes the dynamics of the negotiation. As a rule, the company grants the investor exclusivity – parallel talks with alternative funders are put on hold, and the clock starts ticking against the founding team. Every delay weakens your own position, because the need for capital remains while the alternatives fade.

Due diligence: a stress test for the equity story

Due diligence tests whether the substance lives up to what the story promises. Typical stumbling blocks from our experience include messy cap tables, IP rights that have not been fully transferred, informal promises to early supporters and KPIs that cannot be cleanly derived. None of this has to sink a round – but each of these points costs trust, time and often valuation if it only comes to light during the process.

“You win the term sheet with a compelling equity story – and the closing with preparation, discipline and a well-run process.”

From a few pages to a full set of contracts

A term sheet of just a few pages turns into extensive investment agreements. Points that were deliberately left open in the term sheet – liquidation preferences, anti-dilution protection, warranties, vesting provisions, veto rights – are now negotiated in detail. This is where it pays to understand the economic effect of each clause and to set priorities instead of negotiating every point equally hard.

Our advice: actively manage the momentum. A realistic, jointly agreed timetable, a fully prepared data room, disciplined Q&A processes and parallel rather than sequential workstreams shorten the time to closing considerably – and with it the risk that market conditions or investor priorities change before the money is in the bank.