Investment agreement term sheet Template for the UK
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What is an Investment agreement term sheet?
A term sheet template is a reusable outline of the headline points in a proposed investment, so investors and a company raising funds can agree the shape of a deal before drafting the full paperwork. It covers valuation, share rights and investor protections under the law of England and Wales, and gives both sides a shared starting point.
An investment agreement term sheet records the main points of a funding deal between investors and a company seeking capital. It works as a roadmap for negotiating the final agreement, whether you are raising a seed round, a private equity round or growth finance.
The term sheet itself is largely non-binding (confidentiality and exclusivity clauses being the usual exceptions). It helps both parties align expectations early, and typically sets out the investment amount, ownership percentages, board composition and any special rights such as anti-dilution protection or veto powers. Agreeing these upfront makes deal-breakers easy to spot before either side spends on detailed legal work.
You can download a company specific draft in minutes rather than starting from a blank page. GenieAI shapes each term sheet to your rules and context, so the terms and conditions reflect how your business actually raises, not a generic outline you then have to unpick.
Sample clauses: standard wording in a UK investment agreement term sheet
9. Legal Effect, Exclusivity and Confidentiality
9.1 Save for clauses 9.2 to 9.4 (and clause 13 (Governing Law)), this term sheet records the parties' current intentions only, is not intended to create legal relations and is subject to contract, satisfactory completion of due diligence and execution of the Investment Documents.
9.2 For the period of [45] days from the date of this term sheet (the "Exclusivity Period"), the Company shall not, and shall procure that its directors, shareholders and advisers shall not, solicit, negotiate, entertain or accept any offer of equity or quasi-equity investment from any person other than the Investor.
9.3 Each party shall keep confidential the existence and terms of this term sheet and all information disclosed in connection with the proposed investment, save for disclosure required by law, by the rules of any regulatory body or to that party's professional advisers on equivalent terms of confidence.
9.4 Each party shall bear its own costs, save that the Company shall pay the Investor's reasonable and properly incurred legal fees up to a cap of £[75,000] plus VAT on Completion.
10. Investor Consent Matters and Anti-Dilution
10.1 The Investment Documents will provide that the Company shall not, and shall procure that no Group Company shall, take any of the following actions without the prior written consent of the holders of [75]% of the A Ordinary Shares: altering the share capital or the articles of association; creating any new class of shares ranking in priority to the A Ordinary Shares; declaring any dividend; disposing of the whole or a material part of the business; or incurring borrowings in excess of £[500,000] in aggregate.
10.2 If the Company issues Equity Shares at a price per share lower than the Subscription Price (other than Permitted Issues), the Investor will be issued such number of additional ordinary shares of £[0.0001] each, credited as fully paid at nominal value, as places the Investor in the position it would have occupied on a [broad-based weighted average] basis.
10.3 Permitted Issues will include shares issued under an employee share option plan approved by the Investor Director, shares issued on conversion of the Investment and shares issued with the prior written consent of the Investor.
Illustrative extract showing typical drafting under the law of England and Wales. Documents generated with GenieAI are tailored to your rules, standards and context.
Frequently Asked Questions
When should you use an Investment agreement term sheet?
Use a term sheet template when you are ready to negotiate investment seriously but want to avoid the cost of drafting full documentation too early. It is especially useful with professional backers such as venture capital firms, private equity funds and angel investors, who expect a structured approach to funding discussions.
A term sheet earns its place once early talks have established mutual interest but before detailed due diligence begins. Agreeing the key commercial terms and deal-breakers at this point saves both time and legal spend. It is particularly valuable for funding rounds above £250,000, where several investors or complex rights need to be coordinated across a single raise.
What are the different types of Investment agreement term sheet?
- Startup Investment Term Sheet: Focused on early-stage companies, covering founder vesting and growth-oriented provisions
- Convertible Equity Term Sheet: Used for investments that convert to equity at a future funding round, with discount and valuation cap terms
- Mezzanine Loan Term Sheet: Combines debt and equity elements for established companies seeking growth capital
- Limited Partnership Term Sheet: Structured for investment funds and joint ventures, focusing on partnership governance
- Mezzanine Debt Term Sheet: Specialized for subordinated debt with equity-like features in larger financing deals
Who should typically use an Investment agreement term sheet?
- Investors (VCs, Angels, Funds): Usually initiate and draft the investment agreement term sheet, outlining their key requirements and investment terms
- Company Founders/Directors: Review, negotiate, and approve terms on behalf of the target company, often with support from their board
- Corporate Lawyers: Advise both sides on legal implications, draft or review terms, and ensure compliance with UK company law
- Investment Bankers: Often facilitate larger deals, helping structure terms and coordinate between parties
- Company Secretaries: Handle administrative aspects and ensure proper corporate governance procedures are followed
How do you write an Investment agreement term sheet?
- Company Details: Gather accurate company information, including registration number, share capital structure, and existing shareholders
- Investment Terms: Define investment amount, valuation, share class, and any special rights or preferences
- Due Diligence: Prepare key financial statements, business plan, and current cap table
- Governance Items: Outline board composition, voting rights, and any veto rights
- Exit Provisions: Specify drag-along rights, tag-along rights, and anti-dilution protections
- Timeline Planning: Set clear milestones for due diligence, documentation, and completion, mapping each to the month you expect it to close
- Data and Confidentiality: Cover how investor and company information is handled, including any privacy policy or security obligations that apply to shared financial and personal data
What should be included in an Investment agreement term sheet?
- Investment Details: Specify investment amount, valuation, share class, price per share, and completion timeline
- Investor Rights: Detail voting rights, board representation, information rights, and pre-emption rights
- Share Terms: Define dividend rights, liquidation preferences, and conversion rights
- Protection Provisions: Include anti-dilution rights, drag-along and tag-along provisions
- Confidentiality: Clear terms on information sharing and non-disclosure obligations
- Binding Terms: Specify which provisions are legally binding (typically confidentiality and exclusivity)
- Governing Law: Explicit statement that English law governs the agreement
What's the difference between an Investment agreement term sheet and an Investment Agreement?
A term sheet and an Investment Agreement differ in legal status and level of detail. Both relate to the same funding deal, but they play different roles in the process.
| Point | Term sheet | Investment Agreement |
|---|---|---|
| Legal binding | Largely non-binding, except confidentiality and exclusivity | Fully binding legal contract |
| Detail level | High-level summary of key commercial terms | Comprehensive provisions, warranties and schedules |
| Timing | Comes first, as a negotiation tool | The final, detailed agreement signed at completion |
| Cost and complexity | Simpler and quicker to prepare, ideal for early talks before a full raise | More involved, reflecting the finished deal |
You can build a term sheet from a template first, then move to the full agreement once due diligence is done. For related documents, see our non-disclosure agreement templates, which often sit alongside investment discussions, and our shareholders' agreement templates for the governance that follows a completed raise.
Once you know the difference, the next step is to draft the version that fits your raise. GenieAI reviews each legal term against your playbook and flags anything that departs from it in red, amber or green, so a non-legal team can move from term sheet to signed agreement with confidence.
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About the Investment agreement term sheet
- Company Details: Gather accurate company information, including registration number, share capital structure, and existing shareholders
- Investment Terms: Define investment amount, valuation, share class, and any special rights or preferences
- Due Diligence: Prepare key financial statements, business plan, and current cap table
- Governance Items: Outline board composition, voting rights, and any veto rights
- Exit Provisions: Specify drag-along rights, tag-along rights, and anti-dilution protections
- Timeline Planning: Set clear milestones for due diligence, documentation, and completion, mapping each to the month you expect it to close
- Data and Confidentiality: Cover how investor and company information is handled, including any privacy policy or security obligations that apply to shared financial and personal data
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