What Can Still Stop Funds After Investment Documents Are Signed?

Signing settles commercial terms, but it does not remove the separate corporate approvals, investor checks, regulatory filings and bank reviews required before money can move. The slowest independent gate controls the closing. A live register of conditions, owners, evidence and deadlines turns an assumed wire date into a process that can actually be managed.

Andre Pienaar, a director of C5 Capital, the investor involved in the proposed financing, signed a term sheet in February 2018 for a $3 million first financing of groundTruth.

groundTruth was the venture created by PeaceTech Lab, the company seeking the money. The stakes were immediate: this was not a distant acquisition or a theoretical valuation exercise. It was the financing on which the venture was operating.

By July, closing documents had gone into escrow. C5 Accelerate, the C5 entity that provided interim funding, had made two advances while saying closing was imminent.

Then C5 requested another round of diligence.

The investment never closed. groundTruth ceased operating in October 2018, according to the federal judgment in the later dispute. The documents existed. The signatures were moving. But an investor condition remained open, without a finite and agreed list of evidence that would finally satisfy it.

That is the uncomfortable truth behind many cross-border raises. Signing is not the finish line. It is permission to start closing.

Wise says a SWIFT transfer generally takes one to six working days. A verification review alone can take five to 14. The wire is often the quick bit. The slow part is proving, separately to every party with a veto, that the company can issue the shares, the investor can send the money, the regulator is satisfied and the receiving bank will accept it.

The document everyone mistakes for certainty

Founders understandably see a signed term sheet as a promise. Investors see it as a commercial agreement subject to checks. Both views can coexist, which is exactly why trouble starts.

A term sheet settles the broad bargain. Definitive documents set the legal terms. Neither automatically means every condition needed to release funds has been met.

The groundTruth record shows something more specific than the usual warning about diligence: escrowed documents can create a false sense that the last decision has already been made. It has not, if one party can still request evidence without a defined endpoint.

The practical question is simple: what, exactly, can still stop the money?

Start with a dependency register. For every condition, name the owner, the evidence required, the reviewer, the expected duration, the deadline and the consequence if it is late. A long-stop date is the final date after which a deal may end if conditions remain unmet.

Ask the investor which points must be completed before its wire is released. “Further diligence” is not a closing plan. It needs a request list, a reviewer and a decision path.

groundTruth illustrates why escrowed documents cannot replace a finite, signed checklist of remaining closing conditions. Photo: Ludovic Delot / Pexels, Pexels licence (free commercial use).

The authority nobody thought to ask about

Not every closing failure begins with an investor. Sometimes the company or fund does not have the right internal approval.

Cedar Mundi is a Lebanese venture fund established to invest in Lebanese and overseas startups. Its 2026 English High Court dispute matters because it exposed a mundane but consequential question: who had the legal right to approve a proposed portfolio transaction?

Opposition was recorded unless an independent valuation was obtained, the general assembly, rather than merely the board, approved the transaction, and Banque du Liban was informed so that any required non-objection or approval could be secured.

Commercial agreement among transaction sponsors was not enough. Legal decision rights still had to be established.

This is where most people stop looking. They check whether the board is supportive, then move to signatures. But a company constitution, fund documents or regulator rules may require shareholder waivers, a general assembly decision, a particular signatory or an additional filing.

A SAFE, a simple agreement for future equity, does not erase that work. YC states that a US SAFE still needs board approval and that an unfunded SAFE does not take effect merely because both parties have signed. A priced round, where shares are issued at an agreed price, brings a larger stack of documents, including amendments and investor agreements.

Singapore makes the same point in a different accent. Under section 161 of Singapore’s Companies Act, shareholder authority is required before a company allots shares. The company must then make the allotment decision and file with ACRA, Singapore’s corporate registry. For a private company, the allotment takes legal effect only when ACRA’s electronic register is updated. YC’s Singapore SAFE materials direct users to local counsel, which is sensible: copying a US document does not remove a Singapore company’s authority and registry steps.

The lesson is not that every round is complicated. It is that authority is a gate, not a formality. Check the cap table against the legal registers. Identify the actual decision-maker before signature pages start circulating.

PeaceTech Lab. Photo: Dbpcs33bc / Wikimedia Commons, CC BY-SA 4.0.

One approval can still leave you stranded

The largest deals make this easier to see because their failures become public.

Ant Financial agreed to acquire MoneyGram, the US money-transfer company, in January 2017. The parties amended their agreement in April at $18 per share. They had an agreed price and financing support. Yet approval from CFIUS, the US body that reviews certain foreign investments for national-security concerns, remained a closing condition.

On 2 January 2018, almost a year after signing, the companies terminated because approval could not be obtained. Ant paid a $30 million termination fee. MoneyGram’s SEC-filed materials showed that CFIUS risk, money-transmitter licences, financing support and third-party consents were separate dependencies.

MoneyGram demonstrates how national-security clearance can outweigh agreed economics and committed financing. Photo: Kamil Czaiński / Wikimedia Commons, CC BY-SA 4.0.

One cleared item would never have replaced the others.

PayU and BillDesk proved the inverse. Prosus agreed in August 2021 to acquire BillDesk, the Indian payments business, for about $4.7 billion, or INR345 billion. India’s Competition Commission approved the acquisition on 5 September 2022.

That looked like the big hurdle. It was not the last one.

The transaction materials record that other conditions precedent remained unsatisfied by the 30 September long-stop date. The agreement therefore terminated automatically in October. The Competition Commission’s approval was real. It simply was not a substitute for the remaining conditions.

A visible regulatory approval is not a universal release.

For UK mandatory acquisitions, completion cannot occur before clearance, and the initial review takes 30 working days. CFIUS’s 2025 processing statistics recorded 347 notices and declarations, with 67% cleared during the initial 30- or 45-day period. That statistic is reassuring only if you read it carefully. One-third were not cleared in that first period, and even initial clearance says nothing about a company’s separate bank, authority or contractual conditions.

These are not reasons to panic. They are reasons to test competition, national-security, sector-licensing, foreign-exchange and outbound-investment questions before signing.

For more on this trap, see how a deal can fail before a regulator says no.

The bank has its own vote

A signed subscription agreement may satisfy your investor. It does not compel a bank to receive the transfer without questions.

In March 2022, Mercury, the US banking platform, restricted accounts belonging to a number of Africa-linked startups after concerns raised by a partner bank. Rest of World reported that one Lagos founder had investor transfers returned during a fundraise. Wole Ayodele, chief executive of Fincra, a payments company serving African businesses, described opening a US account as one of the hardest tasks for an African startup.

The financing documents were not the issue. The receiving bank had a separate customer-risk decision to make.

Tell the receiving bank about the expected investment before the investor sends it. Give it the sender, amount, currency, purpose and expected date, plus the signed subscription or equity agreement. Ask whether the account is ready to receive that specific payment and what else it needs.

Banks may ask for bank statements, audited accounts, loan agreements or subscription agreements when a transfer is large or unusual. An account that is open is not necessarily pre-cleared for an unusually large foreign investment.

Nigeria offers a useful illustration of why consistency matters. Foreign equity must be coordinated with the receiving authorised dealer. The Central Bank of Nigeria’s eCCI package includes a request letter, board resolutions, offer and acceptance documents, the CAC incorporation certificate and the SWIFT message. Its service standard targets processing within one working day after a complete request.

“Complete” does a lot of work in that sentence. The investor identity, wire narrative, share documents, company register and beneficial-ownership information must all describe the same transaction. A mismatch can turn a one-day target into a chase for corrections.

Why investors leave conditions open

Founders often read an open diligence condition as hesitation. Sometimes it is. More often, it is risk control.

An investor cannot responsibly release funds until it has enough evidence on identity, ownership, authority, sanctions exposure, source of funds and any required approval. Those checks protect the investor from funding the wrong legal entity, wiring to an unverified account or completing a transaction that cannot legally close.

The investor’s danger is different from the founder’s. The founder fears a delayed wire. The investor fears releasing an irreversible wire before a missing fact, approval or document surfaces.

Experienced investors should keep a written list of open conditions, identify the evidence that closes each one, set a decision owner and give the company an escalation route. They should also separate genuine risk items from requests that can wait until after closing. An undefined diligence loop is not prudence. It is unmanaged release risk.

Founders should seek the same clarity. The groundTruth outcome shows why no one should build payroll or supplier commitments around money that remains subject to an unbounded condition.

Put the gates in the right order

Put the cases side by side and a pattern appears that none of them states outright: cross-border closings do not fail because one person says no. They fail because each gatekeeper is judging a different version of the same deal.

The investor checks who is receiving the money. The board checks whether the company may issue the shares. The regulator checks whether the transaction is permitted. The bank checks whether the payment fits the customer and its expected activity.

If those stories conflict, the transaction stops at the slowest gate.

That is why a closing file matters more than a pile of signatures. Keep the ownership chart, constitutional documents, board and shareholder approvals, cap table, signed agreements, authorised-signatory evidence, bank details and tax forms together. Beneficial ownership means the natural people who ultimately own or control an entity. Financial Action Task Force guidance expects that information to be adequate, accurate and current, often checked through multiple sources.

Then prepare a written funds-flow memorandum: account title, account details, currency, intermediary-fee treatment, release sequence and contacts authorised to confirm changes. Verify changed instructions through a call-back to a known contact. Request payment confirmation or an MT103, the bank message that evidences a SWIFT payment.

For the broader commercial warning, read why a term sheet is not cash.

GI Network's view: The strongest closing process is a shared operating document, not a larger pile of signed papers. GI Network would map the authority, regulatory, diligence and banking dependencies in a proposed cross-border raise; test whether the evidence can satisfy investor and bank review; and rehearse the release objections before anyone treats the expected wire as available cash.

Use the Five-Gate Release Check

Before calling a round closed, use this test. Every answer should be yes.

1. 1.Authority: Have the correct board, shareholders, general assembly or other legal decision-makers approved the financing, issuance and signatories?
2. 2.Ownership: Do the cap table, beneficial-ownership chart, investor documents and required registers match?
3. 3.Permission: Have all relevant competition, national-security, licensing, foreign-exchange and other requirements been identified, completed or validly waived?
4. 4.Receipt: Has the receiving bank been told the sender, amount, currency, purpose and timing, and supplied with the evidence it requires?
5. 5.Release: Are the remaining investor conditions finite, the funds-flow instructions verified and the order of wire, allotment and filings agreed?

One “no” does not mean the financing has failed. It means the real closing work is still in front of you.