Ultimate Pitch Guide: Closing your round

Read Part I to prep your pitch, Part II to build your deck, and Part III to run a smooth fundraising process. In this final installment, we’ll cover the last leg of your journey — closing your round.

At this point in your fundraising journey, you’re probably feeling pretty good about where things are. You’ve done the leg work to prepare for your raise, and you’ve had some positive investor meetings. But before the funds hit your bank account, there’s one final phase to navigate — closing your round.

From preparing for diligence to reviewing your term sheets and modeling stakeholder ownership scenarios, your attention to detail during closing can be the difference between raising capital on the best terms or failing to get across the finish line. To help you stay in control, we gathered insights from longtime startup counsel John Bautista, partner at Orrick and co-founder of Clerky, who’s helped thousands of startups navigate their capital raise and close their rounds with confidence. 

Let’s walk through what it takes to close your fundraising round and set yourself up for long-term success.

While you may have delivered the perfect pitch to an investor, their ultimate decision to invest in your company will come down to the “fine print” — that is, the legal context that governs the corporate structure, stakeholder economics, and control provisions of your company. This is where the due diligence process comes in — typically covering everything from your company’s cap table to IP ownership and employment documents.

John’s advice? “Make sure the company has a clean bill of health,” he says, referencing your legal documents and an organized data room. 

Here’s what to prepare.

Key documents for legal diligence

Certificate of incorporation and bylaws

Your company formation documents — particularly your certificate of incorporation and bylaws — should be easily accessible and up to date. These are core to confirming that your company is a valid Delaware C Corporation and that it has the proper governance structure in place to approve the round.

Cap table, including all safes, option grants, and side letters

Your cap table is the source of truth for your ownership structure — and investors will want to understand every component: SAFEs (and the specific terms tied to each), your employee stock option grants, and any side letters granting additional rights to early investors. Make sure every agreement is accounted for — investors will want transparency on total dilution and rights that could affect future governance.

IP assignment agreements and Confidentiality and Invention assignment agreements (CAIAs) for all employees and contractors

These agreements are commonly missing or incomplete in founders’ data rooms, especially for contractors. But regardless of a stakeholder’s relationships with the company, everyone should be signing these agreements.

"Before closing your round, ensure every contributor has signed an invention assignment agreement. If there’s no paper trail, investors will flag IP ownership issues during due diligence,"​ John says.

IRS 83(b) election filings for any equity subject to vesting

Founders and employees who receive equity with vesting schedules are required to file IRS 83(b) elections within 30 days of the grant.

“This is a huge one,” John notes — because failing to file on time can trigger significant and unnecessary tax consequences later. Even non-U.S. taxpayers should submit the form to protect themselves in case they become U.S.-based in the future.

Contracts with vendors, customers, and service providers

Founders sometimes overlook the importance of keeping all third-party agreements well-documented and centralized. Investors will want to see signed contracts for all outside vendors, major customers, and contractors — not only to confirm your obligations but also to assess any potential risks in the contracts. Loose or missing agreements can raise concerns about liability, IP ownership, or exclusivity terms.

These documents will typically be uploaded into a data room — a secure, centralized folder you can share with investors. If you’ve followed the steps in Part I, you might already have this ready to go.

Pro tip: If you’re about to receive a term sheet but haven’t issued employee equity yet, ask the investor to leave the valuation blank until you’ve finished your 409A and grants. “A term sheet can instantly change your valuation and complicate option grants,” John says. 

Once a term sheet lands in your inbox, the clock starts ticking — at least emotionally. “Investors will often put pressure on you to sign quickly,” John explains. “They might include a line saying the offer expires in 48 hours, but that’s usually psychological.”

A term sheet isn’t just about the headline valuation. For best practices, it should include much more detailed information than most founders think — terms concerning governance, future financing rights, and control structure. If possible, get counsel involved early and try to get as many details included upfront in the term sheet as possible so you’re not negotiating material items later when it’s harder to push back.

Here are key terms you should be on the lookout for.

Key terms to look for

• Valuation: While valuation is often the headline number that founders focus on, it’s just one piece of the economic picture — and whether it’s pre- or post-money can materially impact dilution.
• Option pool: Investors often require an option pool to be added before their investment — meaning it comes out of your equity, not theirs. This can be a key contributor to your dilution, especially when combined with SAFE conversions and Series A equity. “Many times, the Series A investor will want you to put aside 10 to 15% of your shares under a stock option plan — because they want you to take all the dilution for that,” John says.
• Board composition: Control dynamics are a major part of any equity round, and John advises founders to be cautious — especially about giving away board seats prematurely. In the SAFE stage, it’s best practice to avoid giving board seats or observer rights in side letters unless absolutely necessary. “You don’t really know what your preferred financing round is going to look like,” he said. If you must concede a board observer right, include a sunset provision so it expires when a professional investor joins the board in your priced round.
• Protective provisions: Once you issue preferred stock, investors gain specific veto rights — often called protective provisions — over major company actions. This is a key difference between SAFEs and equity. With SAFEs, you can make major business decisions without investor consent. But once you have a preferred stockholder, you’ll need their approval for decisions like raising more money, taking on debt, or selling the company. These rights should be clearly defined in the term sheet, not deferred to the final document review stage.
• Legal fees: It’s standard for founders to cover some portion of the lead investor’s legal costs — but how much you agree to matters. The term sheet should spell this out explicitly to avoid inflated invoices later, including specifying which party pays for what and capping reimbursement amounts when possible.

Negotiation tip: If you’re running a competitive process, you can sometimes prepare your own term sheet with blank fields (like valuation or round size) and offer it to investors as the baseline terms you’d like to run with. Importantly, try to avoid naming the investors you’re speaking with. Sometimes, this can come back to bite you as investors will collude and issue a joint term sheet with less founder-friendly terms. 

If you’re raising on a SAFE:

SAFEs are the most common instrument for early-stage capital. They’re fast, flexible, and don’t require issuing stock immediately — which means no major cap table updates or board consent is needed at the time of closing.

But John cautions founders that it’s not uncommon to raise millions on SAFEs without realizing the dilution implications later. At the seed stage, John warns, “Try not to dilute yourself by more than 15%.”

Founders should also watch out for side letters — additional agreements investors may request alongside the SAFE. These often include:

• Pro rata rights
• Information rights
• Board observer seats
• MFN clauses (Most Favored Nation, which can trigger changes retroactively)

While most side letter terms are reasonable, the key asks you want to watch out for include granting board seats to investors or providing open-ended MFNs unless necessary. Regardless, always run the documents through your legal review before signing.

If you’re raising a priced equity round:

Unlike SAFEs, raising equity requires a more involved closing process. Once you’ve agreed on a term sheet, your legal counsel will draft full investment documents — Stock Purchase Agreement (SPA), Certificate of Incorporation (COI), Voting Agreement (VA), Investor Rights Agreements (IRA), and Right of First Refusal (ROFR). This process often takes 2–4 weeks, depending on complexity and responsiveness.

You’ll also need:

• A formal board vote to approve the financing
• Updated 409A valuation post-financing
• Cap table management to reflect new shareholders

And don’t forget: Once you’ve issued preferred stock, those investors will likely gain protective provisions — meaning you’ll need their sign-off on major decisions going forward.

Cap table complexity compounds quickly — especially when you have multiple SAFEs with different valuation caps, discounts, or MFNs. Before your next priced round, it’s crucial to:

• Model out the post-money cap table, showing how each SAFE converts
• Group SAFEs by terms to track which have discounts, caps, or both
• Avoid surprises by preparing investors for who’s already “in” the company

Another benefit of SAFEs? “...(they don’t) hit your cap table. And people who invest in SAFEs, they simply have a contract — a simple agreement for equity…and what that gives you as founders is the flexibility to do stuff with your cap table without having to get the consent of the SAFE investors,” John says. 

Still, when your SAFEs convert, dilution can hit fast — so proactive modeling is key.

What to watch out for: Messy cap tables can kill deals. If you raise too much at a low valuation early on, you could end up with founders owning less than 50% post-Series A, making later rounds difficult.

Once the legal docs are signed and funds are wired, you’ve officially closed your round — congrats! But your relationship with your investors is just beginning (and can last ten years or more). 

Here are some housekeeping tips to take care of before you forget:

• Send a thank you note to new investors
• Update your investor tracker
• Clean up your data room with final versions of all signed docs
• Kick off post-close ops, like updating your board, issuing stock certificates, and finalizing your new 409A

And if any investors passed on this round but want to stay in touch? Add them to your update list — as you continue to grow and raise subsequent funding, warm prospects often convert into new investors in future rounds.

Following a process and keeping these tips in mind can help you close your round and kick off your new investor relationships on the right foot. 

Want expert guidance on your next fundraise?

Apply to join Mercury Raise — and get access to pitch reviews, investor intros, and founder-focused resources every step of the way.