Fri, 2 July 2021
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.
Today we’ll talk about a rolling close.
Closing a fundraising round can be challenging given the schedules of the investors.
A rolling close is used in a deal that is open to investors who can sign the documents and send in their money on their own schedule.
This allows the startup to take funding a little at a time throughout the fundraise campaign rather than trying to capture all the checks and signed documents in one go.
This often applies to a convertible note in which the startup raises funding over an extended period of time using the same note.
It works even if the round does not meet its total fundraise objective in which case the company will have to move forward with less funds.
If there’s a minimum amount that must be invested to launch a company, then it’s better to use a single close method. That way the investors have assurance the company has raised enough funding to achieve the objective.
One variation on this is an initial closing with a rolling close following.
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