A term sheet sets out the price and the rights that come with an investment. We model the numbers and check the tax position before you sign.
The terms decide what founders receive on a sale as well as how much of the company they keep, so model both before you agree the price.
A term sheet is usually not legally binding. The exceptions are the clauses on confidentiality and governing law, and an exclusivity or no-shop clause if it is clearly worded. Once you sign, the no-shop clause can stop you talking to other investors for the period it sets, so read that clause with the same care as the price.
UK Private Capital, formerly the BVCA, publishes model documents for early-stage investments: a subscription agreement, a shareholders' agreement, articles and a Summary of Terms. The current edition was revised on 26 February 2025. The documents are written for Series A, and the publisher says they are not suitable for seed rounds.
The February 2025 edition made these changes:
The founders' percentage after the round, with the option pool included, and what each party receives on a sale under the liquidation preference. Our valuation and dilution page shows the arithmetic.
Whether the share rights fit SEIS or EIS, and whether advance assurance needs updating for the final terms.
The allotment filed at Companies House, the register of members and the cap table brought into agreement after completion.
Usually not, apart from some clauses: confidentiality, governing law, and exclusivity (a no-shop clause) if it is clearly worded.
A term that decides how the proceeds are split on a sale or liquidation. It gives investors priority to get their money back before ordinary shareholders.
The investor's right to invest in a future round so they can keep their percentage.
UK Private Capital, formerly the BVCA, publishes model documents for early-stage investment: a subscription agreement, a shareholders' agreement, articles and a Summary of Terms. The current edition was revised on 26 February 2025. They are written for Series A, and the publisher says they are not suitable for seed rounds (UK Private Capital model documents).
Yes. The share rights it sets out have to fit the scheme conditions, so check any preference terms against them before you sign. Our SEIS and EIS page covers the share conditions.
Yes. A term sheet leads to a subscription agreement, a shareholders' agreement and new articles, which are legal documents. We work out the numbers and the tax position alongside your solicitor.
