Chapter 10: The Fundraising process: Closing phase and what comes next

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Once you have successfully gone through the rigorous process of fundraising (preparation, reaching out and negotiating), there are several administrative and public relations activities necessary to bring the process to a close.  

In this blog post we'll go over the closing steps of the fundraising process, and what comes next.

Legal activities

  1. Investment and shareholder agreements: Once the investment decision has been made, an investment and shareholder agreement is drafted. The investment section will deal with the terms and conditions of the implementation of the investment and this usually requires notary intervention. The shareholder agreement is an arrangement between shareholders to define how a company will be governed going forward. It also outlines the shareholders’ other rights and obligations (reflecting the principles negotiated in the term sheet), such as applicable standstill and non-competition obligations, share transfer restrictions, access to information and reporting obligations, dividend policy, etc. Unlike the term sheet, the shareholder agreement is a binding agreement and signifies that the deal is completed. The shareholder agreement will be signed and its most important principles are often reflected in the articles of association of the company, so as to ensure that the terms are settled and opposable towards third parties. 

  2. Other legal administrative activities: Following the signing of the shareholder agreement, other legal administrative requirements should be carried out. For example, the investor may require the governance of the company to be slightly revisited, leading to additional administrative formalities to be complied with such as granting special powers of attorney.

PwC Pro Tip
  • It is important for you to know when and how you will receive the funds (e.g. wire transfer).
  • Carefully go through the shareholder agreement with a lawyer that has expertise in startup fundraising, as it is critical that founders clearly understand every single clause of the agreement.

Public relations

Public relations (PR) activity results in awareness, which in turn yields financial returns. This might seem like a simple activity but it can be a powerful tool to create further momentum for your startup with regard to recruiting, getting pre-orders or looking for new clients. Here are some key elements of a fundraising press release.

  1. Backstory on startup and founder’s journey

  2. Key metrics that portray the startup growth

  3. What led to the VC investment

  4. Use of the funds for future growth

  5. Thank your earlier investors (before your current round). These are the people that took the real risk.

What happens after the funding round?

After closing the fundraising round, you want to ensure that the relationship with your investors remains positive, and you want to prepare your company for the next fundraising round.  Let’s take a look at a few aspects that you should consider:

Setting expectations and goals

Expectations and goals will have been partially set in the negotiation phase, but it’s still important to lay out or emphasise the expectations of both parties. Once expectations have been mutually agreed, it’s necessary to translate them into pragmatic and measurable goals. You and your investors should agree on key metrics for the expectations and goals set, and these metrics should be tracked and regularly communicated.

Communication strategy

The most-used and expected channel of communication is the board meeting. During regularly scheduled board meetings board members are informed about the current status of the business, review the key metrics and challenge the decisions of management. 

Another way to maintain  a regular information flow (as well as ensuring investor engagement) is to produce monthly reports/updates to give the board a sense of what is going on. These reports should be clearly structured and disseminated frequently (more often than board meetings). Here’s a sample structure for update reports. 


Table 1: Key stakeholders in the fundraising process

Themes Topics
Financial updates
  • Revenue and expenses

  • Burn rate and cash available

Traction updates
  • Customer acquisition, customer lifetime value

  • Churn rate

  • Active users

Product updates
  • New version 

  • Prototypes, beta version

  • UX

Business updates
  • Team: new hires/fires

  • Sales and marketing execution

  • Press updates

Asks/requests
  • Introduction

  • Referrals

  • Feedback

Keep in mind that board meetings are not a ‘one-way street’, during which you only provide information to your investors and receive nothing in return. You should take advantage of the experience of your investors and their networks by approaching them for relevant guidance and asking to be introduced to people in their network who may help you solve major problems in your company.

PwC Pro Tip
  • You don't always have to wait for board meetings before you update your investors. You can use one-on-one calls or other valid ways to maintain a close connection with your investors.

Strengthening the team

Recruiting and incentivising key talents will be crucial, as your team determines your startup's ability to achieve the milestones promised to investors. Having the right team boosts investor confidence and positions your startup for future funding rounds. A few things you can do to strengthen your team include developing a strong recruitment plan, having a strong digital presence, and ensuring that you have an attractive remuneration package. PwC can support you in scaling your team! Contact us to discover how.

Typically this is where you hire a CFO (as-a-service) who will manage the financial operations of your company and help prepare you for your next fundraising round.

Looking for a CFO to help with managing your financial operations?

PwC’s MyFinancePartner service is your one-stop shop for all the financial needs of small and medium-sized enterprises

Looking ahead to your next fundraising

After an initial round is raised, the struggle of fundraising for your startup is not over. If you have been following our blog series so far, you can see that fundraising is an intricate process that takes time - and success depends on you taking the right approach. We recommend planning an investment runway of 18 months between rounds, in order to be prepared for the next fundraising cycle. Even though there is a time interval between funding rounds, you should never stop speaking to investors about your business: think of fundraising as a continuous process.

For more information on how PwC can support you in your fundraising, and how we support startups and scaleups visit our website

Download the full PwC's fundraising whitepaper here

Negotiating

Due diligence and final decision making

Venture deals

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Pascal Janssens

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