When founders embark on the journey of raising venture capital, one of the first documents they encounter is the term sheet.
Often hailed as the blueprint for a VC investment, the term sheet outlines the key terms and conditions under which a potential investment will be made.
While it is non-binding, the term sheet is a critical document that sets the foundation for the legal and financial relationship between the business and the investor. Negotiating it well can significantly impact the future of the business.
Our ‘Anatomy of a term sheet’ series includes insight articles that break down each critical section of a VC term sheet, offering technical insights and practical real-world examples to illustrate how these terms operate and impact in practice.
Our aim is to demystify term sheets and empower founders and their advisors to navigate negotiations with clarity and confidence, whether that’s understanding valuation, share structures or anti-dilution protections or navigating board composition, investor rights and founder vesting.
We regularly help first time founders, serial entrepreneurs and investors to navigate the complexities of venture capital term sheets, ensuring a successful investment for all parties. If you need help with a term sheet, get in touch to discuss what’s needed and how we can help.
Visit our venture & growth capital page for more information on our services, experience and to find more useful insights.
What is a term sheet, why is it important and what are its key features? Read our introduction to term sheets for an overview of this essential foundation of the legal and financial relationship between founders and investors.
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Ordinary vs preference shares – what’s best for founders?
Liquidation preferences – breaking down the payout dynamics
Share options – structuring incentives for growth
Anti-dilution protections – safeguarding investor equity
Other economic terms - tranched investments, preference dividends, and growth shares
Founder vesting – aligning incentives and safeguarding equity
Leaver provisions – balancing founder fairness and company protection
Drag-along, tag-along, and co-sale rights – navigating shareholder exit protections
Pre-emption rights – safeguarding shareholder equity on new issues and transfers
Investor consents – shaping governance and strategic decision-making
Monitoring and arrangement fees – reflecting the costs of investment
Exclusivity clauses – balancing deal certainty and founder flexibility
Diversity, equity, and inclusion clauses – reflecting ESG priorities in venture capital
Sustainability provisions – driving environmental responsibility in venture capital
Insurance requirements – mitigating risk and protecting venture-backed companies
Information rights – enhancing transparency and protecting interests
Confidentiality provisions – protecting sensitive information while building trust
Rory Suggett
Partner and Head of Corporate
+44 (0)117 321 8067 +44 (0)7912 270526 r.suggett@ashfords.co.uk View more
Chris Dyson
Partner and Head of Technology Sector
+44 (0)117 321 8054 c.dyson@ashfords.co.uk View more
Andrew Betteridge
Partner & Head of the Commercial Services Division
+44 (0)117 321 8063 +44 (0)7843 265362 a.betteridge@ashfords.co.uk View more
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