Complete guide to closing a funding round, from series A to IPO

You’re a startup founder in the UK looking to close a funding round. You’ve sent out your pitch decks, and everything is looking good so far.

Now, you are wondering: how do I turn investor interest into signed term sheets and actual cash in the bank?

This guide will walk you through everything you need to know about closing a funding round. Whether you’re a first-time founder looking to close funding or you have some experience up your sleeve, this guide can help you.

While you are here, consider using Wise Business, an international payment processing software. Having a Wise Business account helps you access funding from investors in the UK and abroad. You can open account details in 8+ currencies.

💡 Learn more about Wise Business

Disclaimer: The contents of this article is for informational purposes only and does not constitute legal or tax advice. Decisions related to tax should be made after thorough research, consultation and verification from a qualified financial and legal advisor.

Steps to close the funding round

Below is a step-by-step process to follow when closing a funding round for your startup, whether you’re raising seed capital or series A, B, or C funding:

Securing verbal and written commitments

When you are in talks with investors, especially if they are your first investors, avoid going for a hard close. Instead, take a softer approach and secure a verbal or written commitment.

Y Combinator describes this strategy as The Handshake Deal Protocol., this protocol involves the startup founder sending an email or text message to the interested investor.

The message includes the specific amount, terms of the funding arrangement and a question confirming the investor's interest. If the investor replies “yes", then that counts as a handshake deal.

Note: This isn’t the contractual commitment or the actual deal. The contract sets off when you and your investors sign legal documents and funds change hands.

Negotiate your term sheet

Next is the term sheet negotiation. In a funding round, VCs will often send you their term sheet. They expect you to review and negotiate the term sheet.

Term sheets are non-binding agreements that outline the key terms and conditions of an investment. Therefore, negotiating in these terms is important because the terms you agree to have a significant impact on how you run your company. It also dictates how much control you’re giving up in exchange for investment.

Before negotiation, research and ask for advice from business mentors to clearly understand the terms of your deal with investors. This will give you a sense of the market standard and help you determine whether your investors are being reasonable or unfair.

While negotiating, make sure to note the key components of the term sheet you’re receiving from your investors. Some of the terms include:

• Valuation (pre-money and post-money)
• Equity stake
• Voting and board rights
• Liquidation preferences
• Investor protections
• Information right
• No-shop clause

Additionally, involve startup/VC lawyers, especially before signing the term sheet. At this point, your negotiation leverage is the highest, and key terms in the term sheet can be changed without derailing the deal.

A good VC lawyer would walk you through the term sheet line by line to understand the intricacies of the deal and help you spot red flags in the deal. They will also work with you to create a win-win structure that protects your downside without scaring off your investors.

Note: Term sheets are non-binding contractual agreements. This means that your investors are not legally bound to you until they sign the legal documents.

💡 You may also like our: complete guide to term sheets

Legal documentation and due diligence

Once you sign the term sheet, the legal and due diligence phase begins.

In this phase, the investor would send you a list of venture capital due diligence requests. This list outlines the information the VC investors would need. A comprehensive due diligence checklist would typically include financial review, legal documentation, technical assessment, market validation, and team evaluation.

This process helps investors verify facts, analyse data, and assess risks. It also enables them to determine whether the investment meets their criteria and, more importantly, if it has the potential to deliver the expected returns. The documentation requirements typically vary by investment stage and investment type. For instance, late-stage investments typically require more extensive financial and operational histories than early-stage investments.

Here’s a quick walk-through of the key due diligence documentation that you’ll need to close a funding round:

Seed stage:

• Founding team backgrounds and references
• Market research and validation
• Basic financial projections
• Corporate formation documents
• IP status and strategy

Series A:

• 1-2 years of financial history
• Team structure and key hires
• Customer acquisition metrics
• Detailed market analysis
• Product development roadmap

Series B & beyond:

• 3 years or more of financial history
• Detailed unit economics and growth metrics
• Comprehensive competitive analysis
• Regulatory compliance documentation
• International expansion plans (if applicable)
• Scalability assessments

Late stage/pre-IPO:

• Audited financial statements
• Comprehensive risk analysis
• Detailed market share analysis
• Corporate governance documentation
• Public company readiness assessment
• Customer and partner references

Approve funding round with key stakeholders

Whenever you conduct a funding round, you will need approval from the board and stakeholders.

First, you need to meet with the board, take the minutes of this meeting, especially when the board gives approval. You will need to run the meeting according to your Articles of Association and get a Director to sign the Board Resolution. Your existing shareholders also need to approve the funding round by signing a Shareholders' Resolution. Doing this finalises the adoption of your new Articles of Association and gives the Board the authority to allot a specified number of shares in the share capital of your company.

According to The Companies Act 2006, the Resolution must be signed by at least 75% (by the number of shares held) of your voting shareholders to adopt new Articles of Association¹.

Finalise the deal

Once you’ve gotten approval from the board and stakeholders, you'll need to finalise the deal. Finalising the deal typically involves working with your lawyer (or your funding platform) to turn the term sheets into full documents, for investors to sign.

Receiving funds

After everyone has signed, you’ll send the final payment instructions to your investor and monitor incoming payments. Once you have received the funds, you can call the round “closed”.

With traditional banks, you are more likely to encounter slow settlement times and high FX fees, especially for international wire transfers. This is where Wise can help.

With a Wise Businessaccount, you can get local account details in 8+ currencies. This allows you to receive funding from investors in and outside the UK, like a local, while avoiding expensive international transfer and exchange fees.

Best practice for post-closing

Here’s a quick walkthrough of some of the best practices to follow once your round is closed:

Update your cap table

A cap table is a document that details your company’s equity ownership structure. It outlines who owns what by listing every shareholder in your company, the number of shares they own, and the types of equity they have.

Think of this as a single source of truth for your company’s ownership. Updating your company’s cap table immediately after closing a funding round helps you maintain an accurate record of the ownership structure. It also ensures that you avoid serious legal, financial, and operational complications.

To update your cap table:

• Start by recording all newly issued shares and their classes.
• Record any SAFEs, convertible notes, or warrants that converted into equity shares during the funding round. These investment instruments typically convert to equity once a funding event occurs.
• Calculate and update ownership percentages to reflect dilution across all existing shareholders, including founders and the employee option pool.

💡 You may be interested in our: ultimate guide to cap tables

Communicate with investors

Closing a funding round is one thing, but maintaining a solid and transparent investor relations is another thing. To build a strong relationship with investors, consistently keep them informed about key metrics for your startup.

Doing this can strengthen relationships, build transparency, and increase your chances of raising follow-on funding with your investors. It can also serve as an internal motivator, nudging your team to stay focused on achieving measurable milestones.

An investor update should include recent wins and losses, financials, team updates, customer wins, and your company's core metrics. You can share this update via email, PDF, a deck, or a link. Many startup founders share investor updates monthly, while others do so quarterly.

Tie spend to a clear bottleneck

You should know what you're raising funds for before you close a funding round. Don’t raise first and figure out spending later; identify the bottleneck (product, distribution, regulatory, etc.) and raise capital specifically to solve it.​

In most rounds, the bulk of capital goes toward hiring and supporting the people needed to unlock that bottleneck. For example, your startup might need to hire engineers to ship the next product phase.

To scale operations effectively, you may also need to consider hiring product managers, designers, marketers, support staff, and back‑office teams (finance, HR) to support the next phase of the product launch.

Know your runway and for future capital needs

Make sure you are planning for future capital needs. One way to know this is to know your actual runway. Runway shows how long your funds will last if you keep spending at your current rate (or as planned).

To know your startup’s runway, you would need to know your net burn rate first. This is how much cash you lose per month after you’ve accounted for revenue.

Here’s how to calculate your net burn rate:

If your startup’s expenses are £120,000 and your revenue is £30,000, this means your monthly burn rate is £90,000 (£120,000 - £30,000 = £90,000). Once you know your monthly burn rate, divide your cash on hand by it.

For example, if the total amount of cash in the bank is £600,000, your monthly expenses (or burn rate) are £90,000, and your monthly revenue is £30,000. Here's what your net burn rate would be:

£600,000 / £90,000 = 6.6 months.

At your current burn, you’ve got roughly six and a half months before the bank balance hits zero. That’s already edging into the danger zone for fundraising, because most founders try to kick off a new round with 9–15 months of runway so they’re not negotiating with their backs against the wall.

💡 Learn more about managing your: funding runway

Streamline startup funding with Wise Business

With Wise Business, you can receive and manage investor funds seamlessly. Having a Wise Business account means you can hold money in 40+. The same account also allows you to receive investor funds either by local transfers or international wire transfers.

You’ll also benefit from all of these features with Wise Business:

• International payments at mid-market rate
• Integration with popular accounting software, including Xero, QuickBooks, and Zoho Books.
• Designed to manage multiple currencies all in one place
• Receive payments in 8+ local accounts (only with Wise Business Advanced)
• Wise API for automation and streamlining workflow

*Disclaimer: The UK Wise Business pricing structure is changing with effect from 26/11/2025 date. Receiving money, direct debits and getting paid features are not available with the Essential Plan which you can open for free. Pay a one-time set up fee of £50 to unlock Advanced features including account details to receive payments in 22+ currencies or 8+ currencies for non-swift payments. You’ll also get access to our invoice generating tool, payment links, QuickPay QR codes and the ability to set up direct debits all within one account. Please check our website for the latest pricing information.

FAQ

Here are some of the frequently asked questions on closing a funding round:

What is the average time to close a funding round?

There’s no universal timeline for closing a funding round. However, on average, a funding round should take around 4-6 months.

This timeline is influenced by factors like round size, stage, market conditions, investor appetite, how prepared your materials are, and how quickly both sides move through due diligence and legal documents.

What documents are needed to close a funding round?

To close a funding round, you’ll typically need a mix of corporate, deal, and governance documents that turn investor interest into a legally completed transaction.

At a minimum, this usually includes:

• Company formation documents (certificate/articles of incorporation and bylaws)
• Signed term sheet
• Clean and updated cap table
• Share/Stock Purchase Agreement (definitive financing agreement)
• Updated Articles/Certificate creating or amending the share class being sold
• Investors’/shareholders’ rights agreement (covering information rights, pre‑emption, protective provisions)

How does a funding round closure affect a startup's cap table?

Closing a funding round changes your cap table by adding new investors and usually a new share class. This, in turn, increases the total number of shares and dilutes everyone’s ownership percentage.

Source used in this article:

1. Section 83 - Companies Act 2006

Sources last checked: 26/01/2026