Can you have multiple closings in a Series A financing?

May 23, 2007

Of course. Depending on the situation, additional closings can continue to be held for up to a fixed period of time (such as 30, 60, 90 or 120 days) after the first closing. The company may want the flexibility to hold additional closings at any time at the discretion of the board of directors. The investors in the first closing may require that the timing and identity of investors in an additional closing be approved by a majority (or super-majority) of investors in the first closing. If the investors in the first closing are represented on the board of directors, then one middle ground is that additional closings be unanimously approved by the board of directors. The issue on additional closings is whether it is fair for investors in a later closing to purchase at the same price as the investors in the first closing because the value of the company arguably should increase over time.

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