š In terms of liquidation multiples, 1x can be considered āmarketā for both a non-participating & participating structures š 89% of preferred shares were non-participating in 22, where the investor on exit has a choice: investment monies back ahead of the founders or pro rata participation the ādouble dipā) ā where the investor on exit gets the return of the funds invested & in addition a pro-rata distribution
š Surprisingly there was only a 2% increase to 8% of participating preferred sharesĀ (i.e. The increase in downside protection is unsurprising given the back drop of the decline in venture investment in 22 š 82% of term sheets had some form of straight preferred shares (downside protection for investors) compared to 69% (114 term sheets sampled) in 21. š„ Many thanks to the expert lawyers who have contributed to our guide, including: Adam Thatcher ( Goodwin), Alistair Hammerton ( Shoosmiths), Andrew Pannell ( MJ Hudson), Bryan Shaw ( Fox Williams), Chris Keen ( Taylor Vinters), David Strong ( Marriott Harrison), Henry Humphreys ( HUMPHREYS LAW), Howard Watt ( Fladgate LLP), Ian Moore ( Taylor Wessing), Mark Rundall ( Bird & Bird), Michael Arnott ( MBM Commercial LLP), Phil Robinson ( Withersworldwide), Tom Bohills ( Founders Law) & Tom Ward ( Fieldfisher) š” The flash results are based on anonymised aggregated dataÄÆrom 151 VC final term sheets issued in 2022, with over 200+ term sheets currently in the process of being analysed for the final guide This is especially important given how the VC landscape has changed between 2021 & 2022 The guide allows founders to understand the complexities of a term sheet & what they should be benchmarking against, as well as giving VCs a benchmark on the wider market & how their āstandardā term sheet compares. š The guide is part of our wider founder success initiatives launching this year to help increase the probability of success for early-stage businesses. š¢ Excited to announce some flash results from Silicon Valley Bank UK VC term sheet guide that provides an independent view of what is considered āmarket standardā for key terms in UK & European term sheets across Seed-Series C+
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