Negotiating Venture Capital Term Sheets: Balancing Investor Rights & Founder Protection

Introduction

The term sheet sets the commercial and legal framework for every venture capital investment - and positions agreed at this stage are rarely reopened when the long-form documents are drafted.

This session examines the key economic and control terms in UK venture capital term sheets, how investors protect their capital, and how founders can preserve control, value and flexibility, with reference to the BVCA’s updated model documents and new Summary of Terms published in February 2025.

Designed for professionals with a foundational understanding of company law and equity funding, this webinar focuses on market-standard positions, negotiation strategy and practical risk management from term sheet through to completion.

What You Will Learn

This webinar will cover the following:

• The term sheet: purpose, binding and non-binding provisions
• Valuation and economics: pre- and post-money valuation, the option pool, liquidation preferences and preference share rights
• Investor protections: anti-dilution (full ratchet versus broad-based weighted average), pre-emption rights, investor consents and reserved matters, information rights and warranties
• Control and governance: board composition, investor directors and observers, drag-along thresholds and investor exit rights
• Founder protections: vesting and reverse vesting, good and bad leaver terms, restrictive covenants, founder warranty caps and preserving operational control
• Case law: lessons from DnaNudge Ltd v Ventura Capital GP Ltd on preference share conversion mechanics
• Tax and regulatory overlay: SEIS/EIS and VCT compliance, Advance Subscription Agreements, National Security and Investment Act risk and sanctions provisions
• Negotiation strategy: prioritising terms, reading market conditions, managing syndicates and multiple investor classes, and preparing for future rounds and exit