Comment by FreakLegion

A signed contract is certainly part of the process. I can't speak to outside the US but here the high-level steps are:

1. Engage the firm and reach a decision that they'd like to invest.

2. Negotiate and sign a term sheet. (The only part of this that's legally binding is that you won't continue shopping around while negotiating the full deal with them. That said, it's extraordinarily uncommon for things to fall apart after signing a term sheet.)

3. Negotiate and sign the full deal. (This goes beyond just a contract, e.g. you'll be amending your articles of incorporation to reflect changes in board composition and a million other things.)

Virtually all breakdowns are in steps 1-2. Maybe the firm doesn't want to invest, or they aren't offering a compelling valuation, or they aren't flexible on dilution, or they only lead and you want another firm to lead, etc.

Keep in mind these are VCs, not PE. VCs make their money from outlier companies, so the competent ones don't optimize for worst-case outcomes. You'll never see a dirty term sheet (e.g. liquidation preference > 1x) from Sequoia, for example, because they don't return 8x on a fund by squeezing pennies out of failed startups.