Fundraising
Soft Circle
A verbal or informal commitment from an investor to participate in a round — not legally binding, but typically considered a moral commitment.
A soft circle (or soft commitment) is an informal indication from an investor that they intend to invest in a financing round — before formal documents are signed. When a startup is building a round, they soft circle investors: each interested investor verbally commits a dollar amount, which the startup tracks toward the round total. Soft circles are not legally binding — investors can back out. But breaking a soft commitment damages the investor's reputation significantly in the small venture community. For startups building momentum, accumulating soft circles from credible investors creates social proof that attracts additional investors. The round 'officially' closes only when definitive agreements (SAFEs, notes, or purchase agreements) are signed and capital transferred.