A successful close requires turning the term sheet into a full set of legal documents, the signing of which executes the deal.
Legal documents will probably include a stock purchase agreement, a disclosure schedule, board and shareholder consents, various agreements (e.g. investor rights, right of first refusal, voting, indemnification), various certificates (compliance, secretary, opinion, good standing, incorporation), and perhaps others. It is not uncommon for the legal volume in its entirety to be hundreds of pages.
Your company’s lawyers will working together with your lead investor’s legal counsel to draft and iterate on these documents. It is outside the scope of the Fundraising Lore to go through the various legal details.
The advice in the previous section, Complete Due Diligence still applies: partner with a great lawyer from a tier 1 legal firm. Work closely with them to make sure that the interests of existing shareholders (including yourself) as well as the company are protected. Learn what is “market” (i.e. standard) from your lawyer as well as fellow founders and use that in negotiations except in rare circumstances that call for deviating from the norm. Push back against unreasonable requests. Make sure to keep the ball rolling so you can close within a reasonable amount of time while minimizing legal expenses.
One thing that often catches founders off-guard is that the company pays for investors’ legal counsel. It’s a silly thing to get upset about. It’s market. Just do it and move on, focusing your energy on what matters - closing the round and then building the business.
Overall, finalizing the legal documents is simply a checkbox that needs to be checked. Things rarely go sideways in this part of the process. Stick to the standard stuff and you will be fine.