Term Sheet (UK) by Seedsummit
The Seedsummit Seed Share Term Sheet outlines key terms for an early-stage equity financing round under UK law, covering valuation, liquidation preferences, investor rights, founder vesting, and governance. It provides a model structure for venture capital investment using Series Seed preferred shares, reflecting BVCA-standard provisions and typical UK market practice.
SUMMARY OF TERMS FOR THE SALE OF SERIES SEED SHARES
This Summary of Terms is for use in the first round of equity funding involving institutional/venture capital investors.
Seedsummit notice:
The content and documents on the website have been prepared for informational purposes only and are not legal advice.Transmission of the information is not intended to create, and receipt does not constitute an attorney-client relationship.Audience should not act upon this information without seeking professional counsel. The information contained herein isprovided only as general information which may or may not reflect the most current legal developments. This information is notprovided in the courseof an attorney-client relationship and nor intended to constitute legal advice or to substitute for obtaininglegal advice from an attorney licensed in your region
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About this template
What is this template?
This document is a summary of terms for a Series Seed equity round, rather than a final subscription agreement. It contains specific venture capital mechanisms including a 1x non-participating liquidation preference, broad-based weighted average anti-dilution protection, and reverse vesting for founder shares.
When should you use it?
Use this document to reach a preliminary agreement on commercial terms before drafting definitive investment documents based on BVCA forms. The nearest alternative would be a Subscription and Shareholders Agreement (SSA) which is the full legally binding version of these terms.
What's inside
| Clause | Name | What it does |
|---|---|---|
| Structure of Financing | Structure of Financing | Specifies the aggregate investment amount and pre-money valuation including an unallocated ESOP percentage. |
| Liquidation Preference | Liquidation Preference | Entitles Seed Shares to receive the higher of one times the subscription price or their pro rata share upon a Liquidation Event. |
| Important Decisions | Important Decisions | Requires consent from a Seed Majority for specific corporate actions including altering share rights or declaring dividends. |
| Conversion | Conversion | Grants holders the right to convert Seed Shares into Ordinary Shares at a 1:1 rate, with automatic conversion upon a qualified IPO. |
| Founder Shares | Founder Shares | Subjects founder equity to reverse vesting over a stated number of years, with unvested shares converting to Deferred Shares upon departure. |
| Exclusivity | Exclusivity | Prohibits the Company from negotiating other investment proposals for a period of [exclusivity period] days following signature. |
| Non-binding Effect | Non-binding Effect | Declares the document non-legally binding except for provisions regarding Expenses, Exclusivity, Confidentiality, and Governing Law. |
Who it's for
- a UK company raising its first round of equity funding from institutional or venture capital investors
- founders negotiating equity vesting and liquidation preference terms with a lead investor
- venture capital firms establishing a non-binding framework for a Series Seed investment
How long it runs and how it's signed
Law it's drafted under
England & Wales note
This version is drafted for England & Wales. Scotland and Northern Ireland differ on some points — for example notice periods and tribunal procedure. Tell GitLaw where you hire and it adjusts the draft.
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