Latest / The Series A Show with Fexingo: Early-Stage Funding, Pitch Decks, and Startup Milestones / Why Startups Are Using Rolling Closes in 2026
Transcript
- Lucas: If you are raising a Series A right now, there is a very good chance your round is technically open for months, not weeks. That is a structural change in how venture capital works. Luna: Rolling closes. It used to be a niche tactic for hot rounds. Now it feels like the default. Lucas: Exactly. And I want to be precise about what we mean. A rolling close is when a company keeps its funding round open over an extended period—say three to six months—rather than closing all at once. Investors come in at different times, sometimes at different valuations if the round has a valuation cap or is structured as a SAFE with a most favored nation clause. Luna: I think the big shift is that founders now have more leverage to say no to an investor who wants an exclusive. They can keep shopping the round. Lucas: Right. And that is a direct consequence of the market we are in. Look at June 2026. The S&P 500 is hovering near all-time highs, but the IPO window is still only cracked open. Private companies are staying private longer. So investors are desperate to deploy capital into growth-stage companies, but they are also cautious about overpaying. Rolling closes solve both problems. Luna: The investor gets to buy in at a known price, but the company can still go find more capital. And if the company hits milestones during the open round, they can even raise the valuation for later investors. Lucas: That is a critical point. I have seen several Series A rounds this year that started at a $40 million post-money valuation and, after two rolling closes, ended up at $55 million. The founders used product launches and customer wins to justify the step-up. That is smart capital management. Luna: It also helps with runway. If you close a $5 million tranche in month one, you have cash to hire and build. You are not waiting for the whole round to come together. Lucas: Exactly. And that is the argument I keep hearing from founders: 'We closed a chunk, we are executing, and we will bring in more investors when we have more traction.' It turns fundraising from a binary event into a continuous process. Luna: But there is a risk. If you keep your round open too long, it can signal that you are struggling to close. Investors start to wonder why no one has committed the full amount. Lucas: That is the classic signaling problem. And it is real. I spoke with a VC last week who told me they passed on a company precisely because the round had been open for eight months. They interpreted it as a lack of conviction from lead investors. Luna: So how do you avoid that? The founders I have seen do it well set a clear timeline. They announce a first close with a lead investor, then they say, 'We are targeting a final close in 90 days.' That creates urgency without looking desperate. Lucas: And they also use the rolling close to build momentum. Every new investor is announced—on LinkedIn, in their newsletter, on their pitch deck. It creates FOMO. And the data backs it up: companies that announce multiple closes tend to attract more investors per round. Luna: I think another factor is the rise of rolling funds on the LP side. Platforms like AngelList and Carta have made it easy for investors to deploy capital incrementally. So the infrastructure now supports rolling closes on both sides. Lucas: That is a great point. And it ties into a broader trend we have talked about before—the unbundling of the traditional VC model. Rolling closes are part of that. They give founders more control over the pace and pricing of their fundraising. Luna: And it is not just for early stage. I have seen growth-stage companies using rolling closes for their Series C and D rounds. One company I know raised $100 million over six months in three separate tranches. Lucas: So the question becomes: if rolling closes are so advantageous for founders, why would any VC agree to them? The answer is that VCs also benefit. They can commit capital without having to write a $10 million check all at once. They can spread their risk across multiple investments. Luna: And they get to see the company execute before putting in more money. That is a huge advantage for them too. Lucas: Exactly. So it is not a zero-sum game. It is a structural innovation that aligns incentives better than the old model of a single hard close. Luna: One thing I have noticed is that rolling closes are becoming especially common in AI startups. The capital requirements are so high, and the pace of innovation is so fast, that founders cannot afford to wait three months to close a round. Lucas: That is a great observation. And it connects to a company we talk about a lot on this show—Anthropic. They have raised billions in rolling closes over the past few years. Each time they release a new model, they go back to investors and say, 'Look at our progress. We need more capital.' And investors keep writing checks. Luna: Anthropic is a extreme case, but it illustrates the principle. Rolling closes let you tie fundraising to milestones. That is much more efficient than trying to predict your capital needs 18 months in advance. Lucas: Speaking of efficiency, I think we should also talk about how rolling closes affect cap table management. If you have investors coming in at different times and different valuations, your cap table gets messy fast. Luna: True. But tools like Carta and Pully have made it easier to manage. And most lawyers now have standard templates for rolling close rounds. Lucas: If these conversations are useful for what you are building or running, we want to mention something. This show—and the whole Fexingo Business network—is ad-free. We deliberately do not run ads on these episodes. Luna: And honestly, we want to keep it that way. It makes the content cleaner and more focused on what matters to founders and operators. Lucas: If you want to support that choice, the link is buy me a coffee dot com slash fexingo. No pressure, just a way for listeners who find value here to help us stay independent. Luna: Yeah, it is a small thing that keeps the show exactly as it is. Appreciate anyone who considers it. Lucas: Back to rolling closes. Another trend I am watching is the use of rolling closes in conjunction with SAFE notes. Some founders are raising a small SAFE round with a rolling close to get started, then converting to a priced round later. Luna: That is a hybrid approach. It gives you the speed of a SAFE with the structure of a priced round. But you have to be careful about the conversion mechanics. Lucas: Right. The discount rate and valuation cap need to be set so that early investors are rewarded without diluting later investors too much. It is a balancing act. Luna: I think the bottom line is that rolling closes are here to stay. They are not a fad. They are a response to a market that demands more flexibility from both sides. Lucas: And as we head into the second half of 2026, I expect to see even more innovation in round structures. Maybe we will see rolling closes combined with earnouts or performance-based vesting. Luna: That would be interesting. Imagine a round where the valuation increases if the company hits certain metrics. It aligns everyone around growth. Lucas: Exactly. And that is the direction we are heading. Fundraising is becoming less about a single event and more about a continuous relationship between founders and investors. Luna: So for founders listening, if you are planning your Series A, consider a rolling close. But set a timeline, announce your closes, and keep executing. That is the formula. Lucas: And for investors, be open to joining a round that is not fully closed. You might get in at a better price and see the company's progress before committing more. Luna: It is a win-win if done right. Thanks, Lucas. Lucas: Thanks, Luna. That is our show for today.