Venture Capital Term Sheet Guide 2025
by Glen Waters, Head of Early Stage Tech & Life Sciences at HSBC Innovation Banking
Guest post by Glen Waters, Head of Early Stage Tech & Life Sciences at HSBC Innovation Banking
The annual Venture Capital Term Sheet Guide aims to empower founders to negotiate with confidence, providing transparency into what is considered the market standard for term sheets.
The third edition is the biggest to date, and equips founders, investors, and law firms with new data and objective perspectives on market norms built on a truly comprehensive data set: 588 anonymised term sheets, supplied by 27 law firms, representing 33% of the 2024 UK VC market deal volume.
Key survey stats
588 (532 UK HQ companies) anonymised equity term sheets.
Represents 1/3 of all UK venture capital equity deals that occurred in 2024 above £0.5m as per Pitchbook.
Data was sourced from 27 law firms who operate in this specialised space.
Key findings
Seed investment has surged
Sophisticated and international investors are increasingly engaging at the early stage. That’s driving a highly competitive market characterised by less structure and more founder-friendly terms.
Investor risk appetite is rising at the later stage
These more structured deals are being executed on average at lower valuations, with more investor friendly terms with enhanced downside protection and safeguards against down rounds.
The “scale up gap” remains
While 70% of Seed and 59% of Series A investments were led by UK-based investors, c. 80% of late stage (Series C+, £30m) deals into UK HQ companies came from international investors – up from 51% in 2023.
Investor focus around AI, Life sciences and Biotech, and Fintech has intensified
These sectors represent 38% of surveyed term sheets in 2024, up from 25% in 2023, reflecting an increased concentration of capital into sectors with strong macro-economic tailwinds, and the potential for outsized returns.
Less syndication, but bigger cheques
A trend that reflects heightened competition for high-quality deals and pressure to deploy funds that’s driving VCs to write larger cheques independently to secure allocations and put their capital to work.
This report will help you to:
Get a better, more independent understanding of the market standard for term sheets based on a large sample size of deals. You’ll also gain some transparency and insight designed to help level the playing field for both founders and investors.
Gain understanding of term sheet terms. Legal jargon can be confusing, especially for first time founders, so we aim to demystify it.
Understand some key commercial and practical take aways, including top tips for negotiation, to ensure founders get a fair and good deal.
The Seed stage is the prime opportunity to set deal terms for the best terms in the future. I hope this report, as well as encouraging founders to get a good lawyer, will help founders set up for future success.
Glen Waters, Head of Early Stage Tech & Life Sciences
2025 outlook and investor pulse survey
The report suggests that we may be witnessing the start of a renewed VC and PE investment cycle, which may gain momentum based on:
A more stable operating environment (notwithstanding market volatility and tariff concerns)
Strong thematic drivers such as AI, Climate tech, and Life sciences
Healthy investment activity at the Early and Growth stage, including international interest and investment
Higher levels of exits and capital distribution
This sentiment is echoed by the results of the investor pulse survey of 52 VCs, which showed: ~65% of investors are optimistic, and over 50% planning to increase their activity. Unsurprisingly, investors are most bullish around the potential of AI.
