Growth
Venture Capital Term Sheet Guide 2026
- Growth
- Report
- 4 minutes read
The 2026 Venture Capital Term Sheet Guide, our fourth in this annual series, aims to empower founders with an objective view of deal information so that they can negotiate the market with confidence. 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 takeaways, including top tips for negotiation, to ensure founders get a fair and good deal.
This guide is an independent one-stop practical resource on what “term sheet” market standard looks like. We also have insights from a separate investor sentiment and term sheet pulse survey looking at where terms and the market may move to in 2026.
This year we have the guide into volumes, and when used together, it will provide a joined up view of market practice, but they are equally as useful used in isolation and when needed.
Volume 1: Executive Summary and Market Overview – key insights and takeaways of trends shaping term sheets.
Volume 2: How-to-Guide – the practical playbook with detailed explanations of key terms and negotiation ‘top tips’. – COMING SOON
Volume 3-6: Sector Deep Dives – provides sector specific insight across DeepTech, Fintech, ClimateTech, Life Sciences & BioTech and Health/MedTech. – COMING SOON FOR CLIENTS
Volume 7: Regional & University Spin-Outs – explores how term sheets have been evolving in the Regions and for Uni Spin-Outs. – COMING SOON FOR CLIENTS
Key findings:
Series C+ valuations increased significantly in 2025, while participating preferences became less common as heightened competition pushed investors to offer more founder-friendly terms
Series B and C+ activity has rebounded to 31% of all term sheets (up from 26% in 2024), signalling a flight to quality – with capital focused on fewer, scaled companies, leading to higher valuations, less deal structuring and more founder friendly terms.
AI (generative and LLMs) remains the dominant investment theme, with investors increasingly concentrated in emerging DeepTech-focused sectors:
Activity has risen sharply—reaching 35% (from 15% in 2021)- particularly across the resilience economy (Cybersecurity and Energy), HardTech and CleanTech. At the same time, FinTech and Life Sciences remain two of the largest areas of investment, underscoring the UK’s global leadership in these sectors. This shift reflects a growing preference for businesses with strong competitive moats (high barriers to entry), alongside the rising strategic importance of the UK’s sovereign innovation capabilities.
Regional funding is a real story
In Energy & CleanTech and Life Sciences, >50% of deals across all stages are now being funded in the regions, reflecting proximity to leading innovation hubs such as Cambridge, Oxford and Bristol. This points to a growing concentration of capital in world-leading UK regional clusters where the UK has clear strengths—and where investors see the potential for outsized returns.
However, in some regions term sheets show a higher use of investor protections (i.e. participating preferences) – indicating lower competitive tension, more limited capital availability and a diverse investor mix – with structure used to bridge risk where capital is less abundant.
What is the venture capital term sheet guide?
This report is based on research conducted in-house through a survey of leading UK and international law firms specialising in venture deals, in collaboration with industry stakeholders. Each law firm submitted anonymised data from completed deals. Covering investment rounds from Seed to Series C+, the analysis tracks year-over-year and quarter-over-quarter shifts in key terms, offering a granular, up-to-date snapshot of market norms and on how the venture landscape continues to evolve.
Survey size:
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| 29 Participating law firms | 711 (643 UK HQ companies) Term Sheets Analysed | £11.2bn Aggregate investment value |
Glen Waters, Head of Tech & Life Sciences Banking UK"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."
Thank you to the participating firms
Any opinions expressed are merely opinions and not facts. All information in this document is for general informational purposes and not to be construed as professional advice or to create a professional relationship and the information is not intended as a substitute for professional advice. Nothing in this document takes into account your company’s individual circumstances. HSBC Innovation Banking does not make any representations or warranties with respect to the accuracy, applicability, fitness or completeness of this document and the material may not reflect the most current legal or regulatory developments. HSBC Innovation Banking disclaims all liability in respect to actions taken or not taken based on any or all of the contents in this document to the fullest extent permitted by law. Nothing relating to this material should be construed as a solicitation or offer, or recommendation, to acquire or dispose of any investment or to engage in any other transaction.
