Close the round

On a Monday call, an angel tells Ada: “Love it. We are in!” Ada wants to tell Ben that the round has its first investor. But she has no amount, no cap, and no signature. Paul Graham says that it is not a deal until the money is in the bank. This lesson covers the last steps of a raise: the commitment, the documents, the wire, and the legal filings.

What counts as a commitment

In 2013, Paul Graham wrote the Handshake Deal Protocol, a set of rules for verbal commitments. In the protocol, an offer is an amount plus a valuation or a cap, or the words “no cap”, with an optional discount. A handshake deal has four steps:

The investor says “I am in for [offer].”
You say “OK, you are in for [offer].”
You send an email or a text message: “This is to confirm that you are in for [offer].”
The investor replies “yes”.

The protocol has three more rules. A handshake deal cannot have conditions, such as “if you find a lead”. An amount with no valuation or cap is not an offer. For a range, such as “$50K to $150K”, make the deal for the bottom of the range only.

Until you have a handshake deal, treat the investor as a no. Graham’s words are “a definite offer with no contingencies”. Even after the handshake, investors can change their minds, so get the signature and the wire quickly.

Is it a deal?

Which of these are handshake deals?

A handshake deal is an amount plus a cap, a valuation, or the words “no cap”, with no conditions. Sort each statement.

“I am in for $50K at a $15M post-money cap.”
“I am in for $50K.”
“I am in for $100K at a $15M cap, if you find a lead.”
“We will do $50K to $150K at a $15M cap.”
“I am in for $25K on a SAFE with no cap and a 20% discount.”
“Love it. We are in! Let us work out the terms next week.”
“I am in for $75K at a $15M cap after my partners approve it next month.”

Sort each statement. The first choice counts, and the reason shows when you choose.

Close a SAFE round

With SAFEs, each investor signs a separate contract. Thus you can close one investor at a time. This method is a rolling close. When an investor says yes, follow these steps:

Confirm the handshake deal in writing, on the same day.
Send the SAFE, with the amount and the cap filled in.
Get the two signatures, the investor’s and the company’s.
Receive the wire in the company’s bank account.
Record the SAFE in the cap table.

The YC seed guide says: “Get docs signed and the money in the bank as soon as possible.” For a SAFE or a note, the time from the agreed terms to the wire is usually 1 to 2 weeks. The lesson on what a SAFE is explains the contract itself.

Here is the close of one angel’s SAFE, day by day:

Monday: the angel says “I am in for $50K at a $20M post-money cap.” Ada confirms it by email.
Wednesday: the angel and Northwind sign the SAFE.
Thursday: the wire arrives.

The legal clock started on Wednesday, the day of the signatures, not on Thursday. You learn why in the section on Form D.

Close a priced round

A priced round sells preferred shares at a price per share, so all investors close together on one set of documents. The lead investor gives a term sheet. Then lawyers write the documents, usually on the NVCA model:

The amended certificate of incorporation, often called the charter
The stock purchase agreement
The investors’ rights agreement
The voting agreement
The right of first refusal and co-sale agreement

Due diligence occurs at the same time. The board and the stockholders approve the round, and the company files the new charter in Delaware. Then all parties sign, the investors send the wires, and the outstanding SAFEs convert into preferred stock. The lesson on the anatomy of a priced round explains each document.

Example · step 1 of 5

A priced seed round, from term sheet to money

1
March 1: the term sheet
Suppose that Northwind sells preferred shares in its seed round. It signs the lead investor's term sheet. The no-shop clause is binding, so Ada and Ben stop talks with other leads.

Crowell & Moring expects approximately 3 to 6 weeks from the signed term sheet to the wire from the lead. The company usually pays the legal fees of the lead investor too, often up to a cap.

Time and legal cost of a closeas of 2026

Measure	Value	Source
From agreed terms to the wire, SAFE or note	1 to 2 weeks	Amplify Partners
From term sheet to the wire, Series A	Approximately 3 to 6 weeks	Crowell & Moring
Average legal fees	A little less than $10K (pre-seed), approximately $17K (seed), approximately $40K (Series A)	Pilot data, through 1752vc (secondary, undated)
Series A legal cost	“Upwards of $50,000”, and the company usually pays the lawyers of the two sides	Crowell & Moring

Receive the wires safely

Investors send money by wire transfer to the company’s bank account. Criminals target these wires, because the money is hard to get back after it moves.

Predict first

Business email compromise is a fraud that changes wire instructions by email. In 2025, what losses from it did victims report to the FBI?

Type a guess before you continue. A guess first, even a wrong one, makes the answer easier to remember.

The rules are simple:

Send your wire instructions as a PDF, through a channel that the investor trusts.
Expect a call from the investor’s finance team. Many teams telephone the company to confirm the details, and that call protects the two of you.
Never change wire instructions through email alone. Before anyone sends money to a new account, call the person on a number that you already have.

If money goes to a criminal, telephone your bank immediately and ask for a recall of the wire. Then file a complaint at ic3.gov. The FBI report says that “time is of the essence”.

You sell securities

When you sell SAFEs or shares, you sell a security. US law says that you must register the sale with the SEC, as in an IPO, or use an exemption. Startups use exemptions. A sale under an exemption is an exempt offering, and most startup rounds use Regulation D.

Speak to a securities lawyer before you offer securities to anyone. The rules below explain what the lawyer will ask you.

Rule 506(b) is the most common exemption:

There is no dollar limit.
You can sell to an unlimited number of accredited investors, and to a maximum of 35 non-accredited investors in each 90-day period. These must be financially sophisticated.
You cannot use general solicitation. That is, you cannot advertise the offering to the public.
If non-accredited investors buy, you must give them disclosure similar to a Regulation A offering, with financial statements. Thus most startups take only accredited investors.

Rule 506(c) is the exemption for public advertising:

You can advertise the offering to the public, in posts, podcasts, and websites.
All buyers must be accredited, and you must take “reasonable steps to verify” that status. The SEC says that self-certification alone “is not sufficient”.
From March 12, 2025, SEC staff also accept a high minimum investment as verification: $200,000 for a person, or $1,000,000 for an entity. The investor must state in writing that it is accredited and that no third party finances the minimum. The company must not know of facts that make these statements false.

An accredited investor is a person who passes an SEC test of wealth or knowledge. On the SEC page updated on April 24, 2026, an individual qualifies with one of these:

A net worth of more than $1M, without the primary home, alone or with a spouse or partner
Income of more than $200K, or $300K with a spouse or partner, in each of the last two years. The person must expect the same this year.
A Series 7, 65, or 82 license in good standing
A role as a director or executive officer of the company that sells the securities

The module on investors explains these tests in more detail, in who invests.

What counts as general solicitation

Advertisements, public websites, broadcasts, and public seminars are general solicitation. The test depends on the facts. It mostly asks if you contact persons with no prior relationship through impersonal channels. These routes are safe under Rule 506(b):

Investors with a “pre-existing, substantive relationship” with you
Referrals inside angel networks
A qualified demo day under Rule 148, with more than one company and a sponsor such as a university or an accelerator

Suppose that during a 506(b) raise, Ben posts “Raising a $3.6M SAFE at a $20M cap, DM me!” on LinkedIn. That post is general solicitation. Thus 506(b) is not available for that offering. Northwind must use 506(c), with all buyers accredited and verified, or a different exemption. Speak to a lawyer before you post about a live round.

Decision guide

Which exemption fits your round?

A company that sells SAFEs or shares must register the sale with the SEC or use an exemption. Answer three questions.

Who will buy?

Accredited investors onlyAlso some friends who are not accreditedMembers of the public

Will you advertise the round in public?

Amount to raise in 12 months

Rule 506 has no dollar limit.

The usual path

Rule 506(b)

Limit: No dollar limit
Who can buy: An unlimited number of accredited investors, plus up to 35 non-accredited investors in each 90-day period. These must be financially sophisticated.
Public ads: Not permitted
Filings: Form D within 15 days of the first sale, and state notices

If a non-accredited investor buys, you must give disclosure similar to a Regulation A offering, with financial statements. Thus most startups take only accredited investors.

Also possible: Rule 506(c).

With accredited buyers and no public ads, Rule 506(b) is the usual path for a startup round. One public post about the round changes that: then you must use 506(c) and verify each buyer.

There is one more Reg D exemption. Rule 504 lets a company raise a maximum of $10M in 12 months, but state securities laws still apply. The next lesson covers the paths for the public: Reg CF and Reg A+.

Form D and the state notices

Form D is a short public notice on the SEC’s EDGAR system. It is not an approval, and the SEC charges no fee. Its rules are strict:

You must file it within 15 calendar days after the first sale.
The first sale is the date when the first investor is “irrevocably contractually committed”, for example when the parties sign a SAFE.
If day 15 is a Saturday, a Sunday, or a federal holiday, the due date moves to the next business day.
A late filing does not cancel the exemption, but Rule 507 sets consequences. Thus file on time.

First sale (the signature)	Day 15	Form D due
Tuesday, March 3, 2026	Wednesday, March 18, a business day	Wednesday, March 18, 2026
Friday, June 5, 2026	Saturday, June 20	Monday, June 22, 2026

The states want their own notices too, under their blue sky laws. Rule 506 offerings are exempt from state registration. But most states ask for a notice filing, a fee, and a consent to service of process. The usual deadline is 15 days after the first sale in that state. Most states accept filings through the NASAA Electronic Filing Depository (EFD). California charges a flat $300. New York charges $300 for offerings of $500K or less and $1,200 for larger offerings, and its filing stays valid for 4 years.

Calculator

When is Form D due?

Select the day that your first investor signs. See the federal deadline and the state notices.

Date of the first sale

The day that the first investor signs and is committed. The day of the wire does not count.

Examples:

Size of the offering

Form D due: Mar 18, 2026; Wednesday
Days after the first sale: 15; Day 15 is a business day
SEC fee: $0; Filed online on EDGAR

Filings after the first sale
Filing	Deadline	Fee
Form D (SEC)	Mar 18, 2026	$0
California notice	Mar 18, 2026, if this investor lives in California	$300
New York notice	Typically 15 days after the first sale in New York	$1,200
Other states	Typically 15 days after the first sale in each state	Varies

The first investor signs on Tuesday, March 3, 2026. Day 15 is Wednesday, March 18, 2026. That is a business day, so Form D is due that day.

The clock starts at the signature, not at the wire. Form D is a public notice, not an approval, and anyone can read it on EDGAR.

Work it out

Northwind's first investor signs on Friday, June 5, 2026. Day 15 is a Saturday. How many calendar days after the first sale is Form D due?