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An early stage startup investor made its term sheet public to increase transparency in tech investment

Forward Partners
The Forward Partners team
Forward Partners


  • British venture capital firm Forward Partners has published a detailed pre-seed term sheet.
  • The public term sheet means founders can learn what to expect from a funding deal.

Early stage startup investor Forward Partners has published its pre-seed term sheet, giving entrepreneurs a detailed look at what they can expect from a funding deal.

You can see the term sheet below.

A term sheet is a non-binding agreement between a startup founder and their investor, and covers funding terms, employee option pools, and governance. They can be full of legal language and difficult to understand, especially for first-time founders.

While other venture capital firms such as Seedcamp have published template plain English term sheets that might apply to anyone, Forward's public term sheet includes specifics about the way it approaches deals as a firm.

For example, there's more detail about what happens if a founder decides to leave their startup, under adverse circumstances or otherwise. And Forward also specifies what type of shares it will take in a startup.

Forward investor Matt Bradley told Business Insider that entrepreneurs outside of the firm's portfolio had asked to see its term sheet — a sign that founders are better informed and more confident.

He said: "The ecosystem in London is growing and it's becoming stronger. Ultimately there is more expertise, and founders know more about different funds, different investment structures, and what looks like good or bad terms. So that's probably the source of the demand."

"There was a big demand among entrepreneurs to familiarise themselves with the way in which investors operate," he added. "It's reducing anxiety if nothing else."

The term sheet goes into lots of detail about what a founder can expect

Forward Partners gives lots of specifics about the way it handles investments and certain scenarios.

For example, the firm outlines its "leaver" clauses, which cover how Forward deals with founders who leave their startups.

The clauses are common to term sheets and are split out into what's called good leaver, intermediate leaver, and bad leaver, depending on why they are quitting. A good leaver, for example, will quit because of circumstances outside their control like an accident, while a bad leaver might quit due to misconduct. The definitions and approach will vary between different venture capital firms.

"We have got specific terms about what a good leaver is, what a bad leaver is, and what an intermediate leaver is, and what happens to their shares," said Bradley. "Some people don't allow founders to keep all their shares — we do — if you're a good leaver. Intermediate leaver lets you keep vested shares, and with a bad leaver, there's more variability."

The term sheet shows that Forward Partners will also only subscribe to ordinary shares in a round, where some investors might demand preferred shares. Preferred shareholders will be given preferential treatment if, for example, a startup is acquired.

"We always take ordinary shares," said Bradley. "We want to be totally aligned with the founder, and the founder has ordinary shares.

Bradley said it might only take a fortnight for Forward to send a term sheet to an entrepreneur after the first introduction. But how long an entrepreneur takes to sign that term sheet can vary, and making the document public might help speed up the process.

It still isn't common for investors to make their term sheets public, though there are many more resources that make the jargon much more comprehensible for founders. Bradley thinks one reason for this is that investors want to keep deals flexible, and avoid being pinned to specific terms.

Seedcamp investor Tom Wilson led an initiative with lots of UK investors in 2011 to publish a standard term sheet. He welcomed the move, and said it signalled strength in the UK's early stage market.

"There are lots of early stage funds here, and entrepreneurs are becoming more sophisticated," he said.

You can see the term sheet below and in full at Forward's blog:

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