Deal Terms
Closing Conditions
Requirements that must be satisfied before a funding round officially closes and money transfers.
Closing conditions are the prerequisites that must be met before a venture financing transaction is completed. Standard conditions include satisfactory due diligence, board approval, legal opinion letters, executed agreements, IP assignment confirmation, and sometimes key person employment agreements. Material adverse changes between signing and closing can also trigger condition failures.
In Practice
A Series B closing is conditioned on: completion of IP audit, no material adverse changes, key employee retention agreements signed, and conversion of all outstanding SAFEs on agreed terms.
Why It Matters
Understanding closing conditions helps founders avoid surprises that could delay or kill a deal. Experienced founders negotiate to minimize conditions that give investors optionality to walk away.
Related Concepts
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