Built for this: Termsheets
This year’s Planet A Summit asks one question: what does it take to build companies that get stronger under pressure? That endure. That are built for this moment. Whether you’re building industrial software, breakthrough battery technology, or industrial biotech, term sheets are the bedrock of that journey. Drawing on years advising founders and backing European deep tech rounds, Fladgate partner Howard Watt and Planet A partner Tobias Seikel share practical tips for any founder approaching their first term sheet.
The cap table is a 10-year decision
Every right you grant at seed gets requested at Series A, then at B, then at growth. By Series C you are negotiating against your own prior agreements. The founders who run the cleanest processes at Series B are the ones who said no to non-standard terms at seed. Build rights that fit not just for the current round, but for every round after it.
The term sheet is the deal
Term sheets are technically non-binding. In practice, the long-form is plumbing. Rowing back from an agreed position is rarely successful and almost always costly to the relationship. Speak to a lawyer before you sign, not after. The cost of a few hours of legal advice is a rounding error compared with the cost of negotiating from a weakened position for the next decade.
No surprises
Use term sheet drafts to summarise verbal agreements, not as a communication tool. Initial term sheets should always come with a conversation, and adjustments should be discussed and negotiated ahead of new drafts. Don’t let a negotiation go stale because you’ve misinterpreted the other party’s intent.
Speed is key
Term sheet deadlines exist for a reason. They can always be renegotiated, but do not underestimate the importance of momentum. Don’t take an issued term sheet for granted. If you need more time, communicate.
Leave room to manoeuvre
If there are unknowns in the round eg. the total amount you’re aiming to raise, who will be in the syndicate, make room for uncertainty in the term sheet. The most important point: lay out a clear modus operandi for deciding on those things. Be clear about what decisions need to be made and by whom.
Focus on most important thing you want to agree on
Time is money, especially for founders. Being clear upfront about which decisions need to be in the term sheet, versus what can wait for long-form docs, will dramatically streamline the process.
It’s tempting to try to settle everything early, but resist that. Know which points are non-negotiable for you and focus there: investment amount, founder salary, ESOP, tag-along and drag-along rights. Everything else can follow. The goal is agreement on what actually matters, not a pre-negotiation of the full legal docs.
Do not jump on first term sheet
Receiving a term sheet is exciting, but take your time. They’re non-binding, and the process usually still has a way to go. Use that time to evaluate the full picture, not just the economics. The investor you choose is a long-term partner. Think about the relationship, the dynamic, the people. A strong term sheet from the wrong partner is worth less than it looks.
Non-standard as standard
US founders deal with relatively standardised documents. In Europe, boilerplate varies by jurisdiction, and clauses that look identical to their US equivalents can behave very differently under German, French, or Dutch company law at exit. Drag rights, transfer restrictions, information rights, founder vesting. These are the clauses founders skim. They are also the clauses that matter most when something non-standard happens, which in deep tech, eventually it does.
Bonus: In deep tech, the IP and regulatory clauses matter more than the economics.
Founders spend 90% of their negotiation energy on valuation and 10% on IP assignment, background IP carve-outs, and regulatory milestone definitions. This is backwards. The economic terms reset every round. The IP and regulatory framework you set up at seed is what determines whether you can operate, license, and exit. Read these clauses with the same scrutiny you give the pre-money.
Howard is a partner at Fladgate specialising in UK and European venture capital. Tobias is a General Partner at Planet A.
