Latest / The Series A Show with Fexingo: Early-Stage Funding, Pitch Decks, and Startup Milestones / Why More Startups Are Using Rolling Closes in 2026
Transcript
- Lucas: If you're a founder raising right now, you've probably heard the term 'rolling close' thrown around a lot. It's become one of the defining mechanics of startup fundraising in 2026. Luna: A rolling close is basically when you close investors one by one as they commit, rather than waiting for a single big close at the end of a fundraising round. It's like a continuous fundraise. Lucas: Exactly. It used to be that founders would set a target, say a $5 million Series A, and then they'd only close once they had commitments for the entire amount. But that's hard. You can be stuck in limbo for months. Luna: And during that time, you're not sure if the round will come together, and you can't really deploy the capital because it's not in the bank yet. Rolling closes solve that. Lucas: Right. With a rolling close, the moment an investor commits, you can close that tranche. The money goes into your account, and you can start spending it. And each close creates a signal — 'this round is filling up' — which makes the next investor more likely to commit. Luna: It's a momentum play. And I think it's become more common because of the market environment. Look at the Ark Innovation ETF, ticker ARKK, down zero point three percent over the last five days. Growth is still not roaring back. Lucas: Yeah, and Palantir, ticker PLTR, down six point two percent over five days. There's still a lot of volatility. VCs are cautious. Rolling closes let founders keep the train moving even when the macro environment is uncertain. Luna: So how does a rolling close actually work in practice? Is it just for convertible notes or can you do it with priced rounds too? Lucas: It works with both, but it's most common with SAFEs or convertible notes because those don't require a valuation to be set upfront. You can have a 'valuation cap' and just keep closing. For priced rounds, it's trickier because you need to set a price per share, but some funds do 'rolling priced rounds' where each close is a separate issuance at the same price. Luna: That adds legal complexity. But the upside is you avoid the 'valuation haircut' that sometimes happens if you wait too long and the market moves against you. Lucas: Exactly. And there's a data point that really shows this: Orbio, a startup that automates hiring for frontline workers, just raised twenty-one million dollars. I read about it on TechCrunch this morning. I don't know if they used a rolling close, but it's a typical growth-stage raise in this environment. Luna: Twenty-one million is a solid Series A. But what's interesting is that even larger rounds are using rolling closes now. I've seen Series B rounds that close over six months, with three or four tranches. Lucas: It gives founders flexibility. You don't have to take all the money at once if you don't want to. Some founders prefer to raise less initially, hit a milestone, then raise more at a higher valuation. Luna: That's the 'milestone-based rolling close' strategy. Raise enough for six months, build something impressive, then come back with a higher valuation for the second tranche. Lucas: Makes sense especially in this market where valuations are still under pressure from the 2021 highs. You don't want to lock in a low valuation for the entire round if you can avoid it. Luna: But there are downsides. Rolling closes can scare off some institutional investors who want to see a fully committed round before they write a big check. And it can create a 'hanging chad' problem if you never quite fill the round. Lucas: You mean if you close the first tranche but never get the second? That can happen. And then you're stuck with a 'round that didn't close' — which is a bad signal. So you have to be smart about setting expectations. Luna: Right. One thing we hear from founders is that they use a rolling close for the first half of the round, then a single close for the second half, once they have a lead investor and a set valuation. Lucas: That hybrid approach is becoming more popular. And on that note, something we've been meaning to mention — if you find these fundraising breakdowns useful, whether you're building or investing, there's a small group of listeners who chip in monthly to keep this show going. Luna: Yeah, it's through buy me a coffee dot com slash fexingo. No ads, no sponsors — just listener support. It's a way to say 'keep doing these.' Lucas: And it really does make a difference. Anyway, back to rolling closes — one thing I think founders underestimate is the operational cost. You need to manage multiple closings, multiple legal docs, multiple wire transfers. It's not trivial. Luna: You need a good lawyer and a good cap table management tool. Carta or Pulley. Otherwise you'll go crazy. Lucas: Absolutely. So what's the bottom line? Rolling closes are a tool in the toolkit. They're not right for every company, but in 2026, with the market still finding its footing, they give founders more control over the fundraising process. Luna: And they let you keep building while you raise. That's maybe the biggest advantage. You're not in fundraising purgatory. Lucas: Right. If you can close a million dollars this month, you can hire two engineers and start shipping. That's better than waiting six months for the whole round to come together. Luna: I think we'll see even more adoption of rolling closes in the second half of the year, especially as more funds get comfortable with the mechanics. Lucas: And as founders get more sophisticated about managing their investor relationships. It's a skill like any other. Luna: For sure. Thanks for listening, and if you want to support the show, you know where to find us.