Tuesday, July 14, 2009

A Funding Round is Never Closed Until Money is in the Bank

My close friend Jimmy Kim that I mentioned in my recent VentureBeat piece ("Startup Fundraising 101") pinged me about a critical point I forgot to list, which is NEVER ASSUME A DEAL IS CLOSED UNTIL MONEY IS IN THE BANK.

We experienced and know of verbal commitments that went south, signed terms sheets that went south, and other situations where investors backed out unexpectedly. So we eventually learned that even a signed document wasn't good enough until MONEY WAS IN THE BANK.

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