Before you sign a seed term sheet: 5 numbers that decide what you keep

The term sheet is where the deal gets real

You have a product, a few customers, and a term sheet on the table. Five numbers in it decide what you keep. A term sheet is a short list of terms that become the final deal. Most founders can handle the money. The hard part is the fine print.

Before you sign, ask for the number that changes ownership, control, or payout in each clause. If the answer is vague, pause. You don't need to become a lawyer. You need to know which clause moves ownership and which one moves the board.

These clauses decide what you keep

The clauses that matter most are the ones that survive the next raise. Read them as a checklist. Each item below should take a minute, and each one has a number or threshold you can ask about directly.

• Liquidation preference: ask for 1x non-participating. In Q2 2025, 98 percent of venture rounds used a 1x non-participating liquidation preference. In UK early-stage deals, a 1x preference is standard, so the investor receives an amount equal to its investment before ordinary shareholders receive anything.
• Anti-dilution: ask for broad-based weighted average and avoid full ratchet, the harsher option. If the sheet adds cumulative dividends, ask why. In Q2 2025, cumulative dividends appeared in only 2.5 percent of venture deals, the lowest level on record.
• Board seat: ask for a founder-controlled board and a clear protective-provision list, the items the investor can block. In Q2 2025, protective provisions remained in over 90 percent of deals. Keep the list narrow.
• Pro-rata: ask for pro-rata rights so you can maintain your position in later rounds. In Q2 2025, lead investors held a median seed stake of about 12.6 percent. If your lead wants more, ask how much and why.
• Drag-along: ask for a high threshold before the company can force a sale. In UK early-stage deals, investors often seek an unallocated option pool of about 10 to 15 percent before their investment closes. A bigger pool can dilute you before the drag-along matters.

Check payout and control clauses first, then the clauses that affect your future position. If any clause is missing, ask why.

The number question is the real negotiation

Don't let the term sheet feel like a package. Each clause is a separate dial. If the investor says a clause is standard, ask for the number that makes it standard. If the answer is a range, ask which end they will sign. Silence is an answer too. If the investor pushes back, note the reason and move to the next clause.

If you are in the UK, review the BVCA Model Documents, which contain standard templates for the preference share structures often used in UK deals. If you started with a SAFE, Y Combinator created the format and openly publishes standard SAFE documents as a widely used starting point for most seed rounds. Those documents show the shape of the conversation before the final terms.

Small steps keep the term sheet honest

Print the term sheet and put a sticky note on each clause. Write the number you want to see. When the investor sends a revised draft, compare it line by line. Don't let a new version hide an old change. Keep the original draft and the revised draft side by side. A clean redline, a draft that shows changes, is easier to trust than a quiet rewrite.

Ask your lawyer to explain the clause you are least comfortable with. Don't ask for a full lecture. Ask for the sentence that would make you stop.

Keep the next step small. Send a question before you sign. Get a written answer. Then decide. When the answer changes your plan, take the time to think it through carefully.