Rolling Closes in Venture Rounds

I’ve had a couple conversations recently with founders about rolling closes and thought I would share my thoughts on what I’ve been observing in both the US and Europe. Many of the later stage companies I am aware of have instituted a rolling close when closing a large growth round. This is probably more a sign of the current fundraising environment at the later stage (ie $100m+ raises) than a new norm. Snapchat apparently had a rolling close with their last raise as one example.

At the earlier stages, this has also been a phenomena in the Valley for seed stage co’s. I’ve personally invested into several startups in their first angel round where they’ve kept the round open and used a convertible note to raise over a period of 2-5 months. It’s faster, has lower legal costs and allows you to bring value-add folks in that you meet as your building your company. As long as you can keep building the company without getting hugely distracted by having the occasional investor meeting, I don’t see anything wrong with this approach. Continue reading →