Gary Schall

Most founders breathe a sigh of relief when they ink their first term sheet. An influx of cash is finally on its way, and they no longer have to worry about running out of money or pursuing investors.

That’s true, but their work isn’t done—only different. They’ll need to gather, upload and organize the many documents necessary to getting the deal done, share the news with existing investors and resolve any hitches that might hamper the deal.

Now’s the time to forge a strong and open relationship with their new business partner as well as take the lead in closing the deal they worked so hard to secure. Here are six critical steps to make that happen:

Review paperwork, responsibilities and the schedule. Ask your lawyer for a list of the documents you’ll have to produce, and review that paperwork as you collect it. You don’t need to read every line—that’s why you hire an attorney—but it’s smart to know what you’ll be producing and why. Decide whether your lawyers or the investors’ legal team will draw up the main financing documents and confirm that they can adhere to your deadlines.

Get organized. Create what’s called an electronic data room to store all your financing-related documents. You can use a cloud-storage site like Box. Your e-data room should include all securities, including convertible notes, SAFEs (Simple Agreements for Future Equity), stock option agreements and restricted stock agreements. If you realize that something is missing or incomplete, now is the time to fix it.

You want to make it as easy as possible for people to give you money, so think like your investors. Ask their attorneys how they’d like to see your documents organized, and then arrange your files exactly that way.

Communicate with your existing investors. Let your angels and early seed investors, who may hold convertible notes or SAFEs, know that your company has received a term sheet for an equity round and that you’ll be sending them documents to sign. They will probably want to know how the financing will affect their investment both now and over the long haul.

Assure them you’ll make yourself available to answer their questions and listen to their concerns. Don’t demand that they immediately sign off on the deal. No one wants to cooperate with a bully. I recommend offering at least five business days to review and sign paperwork. That timeframe will keep the ball rolling on your end without exerting undue pressure on theirs.

Understand the disclosure schedule. This is the tedious part of a financing, but it’s essential. Your company will have to disclose to the investors’ information about your existing contracts and other operations. During this due-diligence process, the VCs’ attorneys will review the details for potential issues that could snarl or scuttle the deal. Make it easy for them by storing your disclosure documents in your e-data room. When in doubt, remember that it’s better to disclose more than less.

Be patient. Forget what you’ve heard about how quickly you’ll receive your money. Most financings take about four to six weeks from start to close. Investors and their lawyers juggle multiple deals, and although they’re moving ahead with yours, they’re unlikely to feel the same urgency you do. Do everything you can to move things along quickly, but don’t set unreasonable deadlines.

Be open, honest and engaged. A financing is more than just a business transaction. It’s also the start of a long-term relationship, one that is built on trust and candor. If an issue surfaces during the funding process, reach out to your investors directly and without hostility or suspicion. You might feel safer asking your lawyer to hash it out with their lawyer, but that’s a recipe for misunderstanding, and it doesn’t foster trust—or keep your legal bills under control.

Remember that VCs aren’t funding your company. They’re really making an investment in the potential of you and your team. The best ideas are worthless if the leadership team lacks the ability to face setbacks with frankness.

Building a collaborative relationship during the weeks of financing sets the stage for a rapport going forwards. Do it right and this will be the first of many term sheets you’ll sign in your career.

Gary R. Schall, a Boston-based partner at WilmerHale, helps entrepreneurs and emerging companies navigate the many legal issues they face, from formation to equity and note financings through exit events. He also represents venture capital funds in their investments in startups and high-growth companies. His clients are technology-based and span a broad range of industries, including e-commerce, mobile technologies, hardware, software, telecommunications and life sciences.