Closing . . .

is when all of the agreements between investor and entrepreneur are completed and the signing of documents occurs. Immediately thereafter, the investor begins funding the company. The agreements signed at a venture capital financing are usually referred to as financing agreements. Those agreements govern the ongoing relationship between the investor and the entrepreneur.

Closings are usually a time of excitement and high expectations. In most instances, closings follow a long process of negotiation, document preparation and revision, and personal stress. A sense of euphoria accompanies most closings, and often the entrepreneur rushes out after the closing to make long-delayed expenditures for the company. These expenditures, if planned, can help the company grow and lead it to its next round of success. If made impetuously, however, they can lead to unfulfilled expectations and the realization that the expensive fundraising process must begin again before it should have. See: Financing Agreements.