Quick tips on closing the deal
When you’re running an investment process, time is not your friend. To avoid incurring avoidable risk and cost, you need to close swiftly.
Here are a few choice tips our CEO Sam Riley shared with Blackbird Venture’s Sunrise Island attendees in his workshop last week. For more tips on running a smooth investment process from start to finish, watch the full workshop here.
Keep it simple
Closing the transaction is very much related to how prepared you were in the rest of the process; it’s closely linked to everything you’ve done up to this point. But it’s also related to keeping things as simple as possible in the final stretch. This means not entering into convoluted terms and structures, or being too fussy – or too greedy – at the last minute.
Once you’re trying to close, it’s time to stop selling and get into more of a project management mindset. Your priority needs to be wrapping up all those final tasks that will culminate in the end of the deal, and this requires asking the right questions.
- What needs to be done to close?
- Who’s doing it, and do they need help?
- Where is the biggest risk to closing? Do we need to address it?
At this point, you should be having a daily huddle to assess whether there’s anything that could get in the way of a successful close. (You don’t want to wait longer than a day to uncover any potential roadblocks.)
Show your enthusiasm
While you’re asking all these questions, it’s important to show that you’re excited, but avoid coming across as worried or paranoid.
The appropriate response to, “You seem excited to close,” is, “Yes we are; we’re excited to get started!” Show that your management team is ready to execute the plan – they’ve currently got their foot on the brakes, but the sooner this deal is closed, the sooner they’re off making it happen.
Consider your timing
When we were raising capital, one of the biggest mistakes we made was not taking the calendar into consideration. We were all set to close on 20th December, with about ten hours of work left in total, when the whole team suddenly disappeared on their Christmas break. It caused the deal to drag on, putting us at risk unnecessarily.
Every day you don’t close, something can happen – whether it’s in the world at large, in your industry, or for that particular VC – and the deal is off the table.
Be clear in what you want out of the deal but understand that raising requires negotiation; to work for everyone, it’s got to be a give and take. On the other hand, don’t entertain too many different preferences, protections and amendments, or you won’t have any ground left to stand on. Find the right balance and keep it as simple as possible.
For more advice on raising capital the ready way, access Sam’s full workshop video here.