I’ve never met a founder that didn’t have a sense of urgency when closing a growth financing round. “We just want to move fast” is generally the mantra that keeps repeating in their heads. However, once the term sheet is consummated between both sides of the table is where the trickery begins.

A great deal of energy from founders and investors comes during the due diligence. Data rooms, management interviews, and metric analysis are just a few. As all this work is being done, time continues to tick, and money continues to be burned. If a founder goes to market with six months of runway, you can have four once you start redlining deal docs. This is the deal pregnancy phase. Investors feel the pressure, too; partners want to stay within all this time and expense.

Deal pregnancy is when a founder and investor are emotionally and financially invested in a deal. They are all in. What happens if either side starts to see glaring red flags? I am personally guilty of throwing dirt on issues because I am pregnant with the deal. Founders usually say, “It will be fine once we close.” This is dangerous on both sides.

It is better to walk away from the deal than fund just because you are “pregnant.” My experience is that people generally do not get better after the funding happens.