Can you have multiple closings in a convertible note or SAFE financing?
Takeaway: Yes, raising a seed round with multiple closings is a standard and highly effective strategy, allowing you to build momentum and bring in investors as you find them rather than waiting for one single, chaotic "closing day."
A priced equity round, like a Series A, is a highly structured event. It typically involves a single "closing day" where all investors sign the documents and wire their funds simultaneously. A seed round raised on convertible notes or SAFEs is usually much more flexible. It is almost always structured to allow for multiple closings, often referred to as a "rolling close."
This means that you do not have to get all of your investors lined up at once. You can "close" on investors and accept their capital as they commit, over a period of several weeks or months. This is a major strategic advantage for an early-stage founder.
How a Rolling Close Works
Board Approval: The Board of Directors will pass a resolution that authorizes the company to sell up to a specific total amount of convertible notes or SAFEs (e.g., "up to $2 million").
A Standard Set of Documents: Your law firm will prepare a single, standard form of the convertible note or SAFE that will be used for every investor in that round.
Accepting Capital Over Time: As you pitch investors and they commit to investing, you can have them sign the standard agreement and wire their funds immediately. You can then use that capital to continue building your business while you are still fundraising from other investors.
The Strategic Advantages of Multiple Closings
Creates Momentum and FOMO: A rolling close is a powerful psychological tool. Once you have your first check in the bank, you can go to other potential investors and say, "We are raising a $1.5 million round, and we already have $500k committed and closed." This creates social proof and a sense of urgency that can help you close the rest of the round much faster.
Flexibility: It gives you the flexibility to take capital from investors when they are ready to commit, rather than having to wait and coordinate the schedules of a dozen different angel investors for a single closing day.
Access to Capital: It allows you to access and use the capital as it comes in, rather than having to wait until the entire round is full.
The Key Rule: Consistent Terms
The one critical rule for a rolling close is that all investors participating in the same "tranche" of the financing must receive the exact same terms. They should all be signing the same convertible note or SAFE with the same valuation cap and discount. If you later decide to change the terms (for example, by increasing the valuation cap because demand is very high), that should be considered a new "tranche" of the financing with a new set of documents.
Disclaimer: This post is for general informational purposes only and does not constitute legal, tax, or financial advice. Reading or relying on this content does not create an attorney–client relationship. Every startup’s situation is unique, and you should consult qualified legal or tax professionals before making decisions that may affect your business.