Is My Term Sheet Market Standard?

Scale & Grow Partner Mountside Ventures are Europe's leading accelerator and early-stage advisory firm, optimising all levels of the Venture value chain - from Startups to Funds & Limited Partners.

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Is My Term Sheet Market Standard?

Understanding term sheet norms is essential for founders navigating a venture round. While every deal is different, knowing what’s typical across the market helps entrepreneurs negotiate from a position of clarity and confidence.

Based on data from over 200 VC firms and more than 1,000 investments, this guide highlights what’s considered “market standard” for early-stage term sheets in 2024.

Why This Matters

Term sheets lay the legal and financial groundwork for investment. They define how power, risk, and reward are shared between founders and investors. But the language can be complex—and not all terms are founder-friendly.

Having benchmark data allows founders to:

  • Spot red flags or overly aggressive clauses

  • Prioritise what to negotiate

  • Understand which terms are non-negotiable vs. flexible

Key Market Norms to Know


📄 Share Class

  • 80% of investors issue preference shares (not ordinary shares)

  • The standard is 1x non-participating liquidation preference

  • Only 14% use participating preferences


📈 Valuations

  • Pre-money valuations have more than tripled over the last decade

  • Between 2011–2021, the average rose from £6m to £29m

  • Recent market shifts are yet to be fully reflected in public data


💰 Investor Fees

  • 70% of investors recharge deal fees to the company

  • Common one-off fees: legal, financial, or technical due diligence

  • VCs typically charge 1–2%, while EIS/VCT funds may charge 5–7%


🧑‍💼 Board Rights

  • 80% of investors expect a board seat if leading the round

  • Board Reserved Matters (veto rights) are standard


⏳ Founder Vesting

  • 98% of investors require some founder share vesting

  • The most common schedule: 4 years with a 1-year cliff


🧾 Share Option Pools

  • “Market standard” = 5–10% of total equity

  • 57% ask for this range; 32% ask for 10–15%

  • VCs want to ensure there's enough to attract future talent


🤐 Exclusivity

  • 35% of term sheets include a 4-week exclusivity period

  • This is a binding term to prevent parallel fundraising


⏱ Deal Timelines

  • Most VCs expect to complete legal/diligence in 8–12 weeks

  • Smaller cheques may close faster (2–3 weeks)

Common Founder Pain Points

Founders often face friction in three areas:

  1. Lack of differentiation: Investors struggle when founders can’t clearly articulate what makes them different

  2. Weak relationship-building: Long-term engagement often begins well before the first raise

  3. Omissions or overclaims: Investors value honesty over polish—be upfront about risks, turnover, or underperformance

Summary: Be Prepared, Not Surprised

While every term sheet is bespoke, understanding what’s normal arms founders with the knowledge to negotiate effectively. Founders don’t need to accept every clause, but they do need to know where the benchmarks lie.

This guide provides a starting point—not legal advice. Engage legal counsel, but come to the table informed.