A Template of Terms for a Potential Startup Advisor

Bringing on an Advisor can materially improve how your company operates. Bringing on external advice can help you achieve so much more, so much faster, by leveraging the experience of others. However, as with any new relationship, it’s best for everyone if the nature of the relationship is formalized so that expectations are met. As part of our ongoing initiative to reduce the level of work and legal documentation that founders have to pay for and draft, we are posting this new document to help streamline this process.

Several weeks ago we posted some guidance on issuing the right number of shares/options to employees and advisors. As discussed in that post, sharing equity with employees and advisors is often used as a motivational tool and a way to develop a company’s relationship with that individual.

But before thinking about numbers of shares or options to issue an advisor, there are a number of points to hammer out. What is the advisor’s role? Will she be providing marketing insights or board-level guidance? How much time will she be expected to commit each month and for how long? What will she be paid? Establishing these points will help determine the right number of equity to issue, as well as make sure everyone is on the same page in terms of expectations and responsibilities.

Some guidance on numbers and a head start for US Startups

For US startups, the Founder Institute offers some guidance on numbers as well as a free template agreement to help get the formal framework for the relationship out of the way quickly and without the legal headaches. You can read their guidance and get the US template here.

And for the UK…

To complement the Founder Institute’s resource on this discussion, we’re launching the Advisor Agreement (download here in PDF). This free template agreement is UK-friendly and covers the standard big issues – appointment and termination, time commitment, roles and duties, fees, conflicts of interests and confidentiality. Of course as you discuss the arrangement, you may come across other points to include (exclude) or make other alterations.

Usage of this document

As with our other Seedsummit documents, the Advisor Agreement is meant to be a template on which to tailor the bespoke agreement that works best for you, or to use it as is.

Yet another big thank you to the folks at Brown Rudnick for drafting this document.

Brown Rudnick LLP is an international law firm with offices in the United States and Europe working with emerging technology businesses and investors.

Both SeedSummit and Brown Rudnick LLP expressly disclaim any and all responsibility and/or liability for any loss or damage whatsoever arising out of or in connection with acts or matters done or omitted to be done in reliance upon any document, information or opinion contained on this website. The documents, information and opinions on this website have been prepared for general informational purposes only, may not reflect the most current market and legal developments and may not address all relevant business or legal issues; accordingly, such information is not promised or guaranteed to be correct or complete. Further, the documents, information and opinions on this website do not, nor are they intended to (a) constitute legal advice, (b) create an attorney-client relationship or (c) be advertising or a solicitation of any type. You should not rely upon any documents, information and opinions on this website for any purpose without seeking legal advice from licensed attorneys in the relevant jurisdiction as each situation is highly fact specific and requires a knowledge of relevant laws. Certain parts of this site link to external internet sites, and other external internet sites may link to this website. Neither SeedSummit nor Brown Rudnick LLP is responsible for the content of any external internet sites.

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UK Seedsummit Termsheet Initiative V2.0

Update: An updated version of v3.0 has been published here

Today we’re launching of v2.0 of the Seedsummit Termsheet Initiative documents with revisions from feedback we’ve received since launching and with more explicit SEIS compliance as per direct discussions with the UK’s HM Revenue & Customs.EMEA square 150

It was about a year and a half ago we launched the Seedsummit Termsheet Initiative, inspired by the Series Seed docs of the USA. Our goal for the initiative was to help make raising funds easier for startups and investing easier for investors across EMEA by providing accessibility and transparency of information between everyone. With the feedback we have received we have updated the  two template termsheets – one general and one Angel version – for the EMEA startup community to adopt, adapt and discuss before engaging in a financing round.

The termsheet template framework has had a wide circulation among the startup community since its launch, and we’ve had some great feedback from both investors and startups who have put the termsheets to use. The idea behind the initiative is for both founders and investors to have access to the documentation and terms that are being generally used so as to have better and more meaningful discussions about what terms they would like to use and why.

Version 2.0: Fixing Bugs and Addressing the Latest Issues in Startups

We’re launching v2.0 of the General and Angel Investment TermSheets with revisions to address the bugs identified and concerns discussed. This revamping includes:

-Information Rights: We’ve sought to clarify the optionality of the frequency of information reporting by the startup to the Investor in the “Information Rights” section. Information rights are important to many investors and can be really beneficial to the startup by allowing the founders to mine the wisdom of experienced investors. But how often updates are provided is different for each startup/investor relationship. We’ve added in prompts for monthly or quarterly reporting, in addition to weekly, to highlight the flexibility of this term.

-Founder Share Section:

–Vesting: Version 2.0 now includes different reverse vesting provisions for bad leavers and good leavers in the “Founder Shares” section. There was a bug in the previous versions of the termsheets that allowed a bad leaver (someone who is fired for Cause and Gross Misconduct – see our Seedhack Founders Collaboration Agreement v2 post for discussion on the merits of good leaver/bad leaver provisions) to keep all the shares post-vesting period. Version 2.0 rectifies this issue and simplifies the process by stating what happens to shares of a bad leaver (which should be narrowly defined in the definitive documentation).

–Founder Departures: Additionally, we’ve added another optional piece in the “Founder Shares” section to help make cash distributions to founders on an exit fairer across all employees/founders and remaining shareholders when a founder leaves early. The example case here is what if a fully vested founder leaves in year 5/10, should they receive the value (or a portion thereof) of their shares of the company in year 5 or when the company is sold in year 10. Again, the user is given the choice of using it or not depending on how the founders feel about any kind of early departures from co-founders.

–Founder Shares Post-Vesting: Finally, we’ve addressed another point in the “Founder Shares” section that we’ve received some questions about. Namely, what happens to a leaving founder’s shares after the vesting period. The language we’ve included in the template prompts a decision on a percentage of the leaving founder’s shares to be sold back to the Company (with secondary purchase option for Seed shareholders). However, continuing on the discussion of good leaver/bad leavers and the fair treatment of employees and founders, we’ve gone a step further to outline the sale price for a good leaver (fair market value) and a bad leaver (lower of nominal price or subscription price).

-Equalization of Financial Terms. An optional new clause, depending on your needs, called “Equalization of Financial Terms” has been added. Based on some feedback we received, this optional clause seeks to deal with an increasingly problematic situation where large tech buyers are doing an acqui-hire of a company (only the team) and are effectively unfairly treating all of the remaining shareholders (and the work they’ve done) and the buyer assigning this positive value exclusively to the founders as a retention bonus after they left the startup company as bad leavers. Effectively, this leaves the remaining shareholders with only the delta of enterprise value (usually a nominal amount) after the removal of the retention bonus from the total package. This wording attempts to reduce the occurrence of this unfair action for the larger shareholder base and remaining company employees with options. Check out blog post on v2 of the Founders Collaboration Agreement for further discussion on acqui-hiring.

Angel Investment Termsheet: HMRC SEIS Stamp of Approval

In addition to working out bugs and fine-tuning the language, we’ve also sought to improve the Angel Investment Termsheet to make taking advantage of the generous Seed Enterprise Investment Scheme (SEIS) as easy as possible for startups and investors in England. We’ve worked closely with HMRC over the past few months and are thrilled to be able to offer the following updates to the template:

-Structure of Financing SEIS Guidance Notes: We’ve added in an explanatory comment to help inform and guide startups through the SEIS process. This comment is to be deleted from the final version of the document before execution. The comment outlines the caps for SEIS for both investors (£100,000 pa) and companies (£150,000). The comment also explains how to classify shares should the total investment amount for SEIS shares exceed the cap. In the event this occurs, two classes of ordinary shares would need to be issued, SEIS and non-SEIS, pro-rated for each investor according to their investment amount.

-Priority Payment on Exit Terms for SEIS and Non-SEIS Investors: We’ve bulked up the priority payment on exit section to provide guidance and language for investments that include both investors who seek SEIS qualification for their investment and for those who do not. To be eligible for SEIS tax relief, the shares being issued cannot be subject to any arrangements that, by insurance, indemnity, guarantee or otherwise, protect the investor from the risks attached to making the investment. We’ve thus provided optional priority payment on exit language that provides protection for non-SEIS investors and adheres to this requirement for SEIS investors.

If you’re interested in learning more about SEIS and the tools available to help startups achieve SEIS qualification, see our blog post on the SEIS Workshop we hosted in conjunction with 10 Downing Street and HMRC earlier this month.

These documents are drafted for use in England, however they can be modified with basic changes for the relevant jurisdiction. We’re also working on publishing the docs in several languages – stay tuned!

A big thank you to our friends at Brown Rudnick LLP and Kathryn Robertson, Senior Policy/Technical Advisor, HMRC.

As with all the Seedsummit documents, the Termsheets are meant to help the startup community grow by their use, adaptation, sharing and, with your comments and experiences, improvement. So please be in touch with your comments on the documents and how you have found them useful.

[Items between brackets within the documents are optional and are there to provide transparency on available options]

The documents were prepared by Tina Baker of JAGShaw Baker.


JAGShaw Baker is a specialist corporate law firm serving entrepreneurs, companies and investors in high-growth industries.

Brown Rudnick LLP is an international law firm with offices in the United States and Europe working with emerging technology businesses and investors.

SeedSummit, JAGShaw Baker, and Brown Rudnick LLP expressly disclaim any and all responsibility and/or liability for any loss or damage whatsoever arising out of or in connection with acts or matters done or omitted to be done in reliance upon any document, information or opinion contained on this website. The documents, information and opinions on this website have been prepared for general informational purposes only, may not reflect the most current market and legal developments and may not address all relevant business or legal issues; accordingly, such information is not promised or guaranteed to be correct or complete. Further, the documents, information and opinions on this website do not, nor are they intended to (a) constitute legal advice, (b) create an attorney-client relationship or (c) be advertising or a solicitation of any type. You should not rely upon any documents, information and opinions on this website for any purpose without seeking legal advice from licensed attorneys in the relevant jurisdiction as each situation is highly fact specific and requires a knowledge of relevant laws. Certain parts of this site link to external internet sites, and other external internet sites may link to this website. Neither SeedSummit, JAGShaw Baker, nor Brown Rudnick LLP is responsible for the content of any external internet sites.

Download Documents:

Seedsummit General Term Sheet V3

Seedsummit General Term Sheet V2 (legacy)
version notes:

*Typically used by Institutional Investors (VCs)*
* [Items between brackets are optional and are there to provide transparency on available options]*


Seedsummit Angel Term Sheet V3

Seedsummit Angel Term Sheet V2 (legacy)
version notes:

* Typically used for smaller rounds, Angel investors, and S/EIS tax relief (see 3rd bullet for details)*
* [Items between brackets are optional and are there to provide transparency on available options]*

Supporting Organizations:


Yandex notion-capital 360 creandum_logo
logo_profounder OV_color gimv seedcamp
earlybird_logo index ISAI_small henq
NZ doughty hanson JRanger wellington
estag PointNine_logo kima nesta_logo
BDMI_fixed eden Passion-Capital-RGB samos
Venrex Logo CSC ACT

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This work is licensed under a Creative Commons Attribution-NonCommercial 3.0 Unported License.

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French and Irish Termsheets and The Seedsummit Workshop

Today, we are announcing the availability of the Seedsummit Termsheet framework docs for two new jurisdictions: Ireland and France. Irish and French companies can now take advantage of  the localised  documents thanks to the efforts of Maples & Calder, D’Alverny Demont & Associés, and Taylor Wessing. We hope that this expanded availability will help facilitate discussions between entrepreneurs and investors in both countries.

Additionally, a few weeks ago, we held a Seedsummit Termsheet Workshop to help thinking about how an investor looks at a term sheet vis a vis an entrepreneur. We invited 40 people to Moo’s offices to have conversations with lawyers from Brown Rudnick, Orrick, and Taylor Wessing about how to think of each one of the terms on the Seedsummit Termsheets. We also covered additional terms that could be included in a term sheet, to help entrepreneurs understand the intricacies of the legal issues involved in building a company.

We hope to further this initiative and increase transparency for both sides, and make it easier, faster, and more cost efficient to put financing rounds together. Also check out the founders’ agreements and the original term sheet documentation if you are interested – they might save you time and money!

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With Support From:

Seedsummit Term Sheet Initiative Workshop and Translations

About a month ago, Seedsummit announced the start of our termsheet initiative by bringing together 21 investors around a set of guideline terms with the purpose of providing greater transparency to European Founders about the fundraising process. The hope continues to be that this transparency creates more meaningful dialogues between founders and investors when fundraising discussions occur.

To further catalyze this initiative, Seedsummit will be holding a termsheet workshop on Sep 20th open to all founders that are interested in raising funds soon. The aim is to have a walkthrough of all the terms as well as to have an open Q&A environment. Legal Firms Orrick and Brown Rudnick will be present to answer any questions you may have.

We’d also like to take this opportunity to mention that we’ve had several new supporting partners join the termsheet initiative: DuMont Venture, ISAI, Yandex, Creandum, Bertelsmann Digital Media Investments, as well as various Angels.

Lastly, we’re excited to announce that thanks to Osborne Clarke and Christian Musfeldt in Germany and Maples & Calder in Ireland, we’ve been able to get the original documents translated for German and Irish jurisdictions.

Although we acknowledge no one has the right answers for many of the questions that naturally arise as part of an initiative such as this one, we have been reassured by the positive feedback we have received from founders. We hope to continue to be a conduit for discussion between founders and investors.

Below is some of the feedback we have received:

— “Having a standardized term-sheet is great step forward for the European start-up world. Any term sheet contains many complex legal constructs and for a first time entrepreneur negotiating these with an experienced VC the knowledge and experience gap means the odds are against the entrepreneur. A standardized term-sheet takes the industry a step closer towards a level playing field as even inexperienced founders will easily be able spot deviations from the standard and know where to focus their attention.” – Alexander Ljung, Soundcloud

— “This is a great initiative. VCs can sometimes have an unfair information advantage over first-time entrepreneurs—particularly if there is no intermediary involved. Initiatives like this help to redress that imbalance. The simplest way to use the seedsummit template docs would simply be to do a compare-and-contrast against any termsheet you receive. Don’t feel shy about asking your potential investor to explain any and all variation – there may be excellent reasons for each variation, but make sure you have heard and understood them. Taking funding is like getting married – it’s a long term commitment which is expensive to reverse. Make sure you never sign any investment agreement which you don’t fully and completely understand. Sounding stupid is less of a risk than signing something you don’t understand. And you’d be surprised how many investors would struggle to explain succinctly the difference between broad- and narrow-based weighted-average anti-dilution protection! There are a couple of elements you might see which the seedsummit template document doesn’t include – a cap on liquidation preference, for instance. It’s also important when you’re talking about option pools to know whether they’re being carved out of the ‘pre-money’ or ‘post-money’ cap structure. Those points aside, the template docs give a good sense of the sort of terms which an early stage technology start-up might expect to receive from a reputable investment firm.” – Greg Marsh, One Fine Stay

— “The Seed Summit documentation initiative is a very welcome initiative for entrepreneurs, especially at the very early stage. Neither entrepreneur nor investor want to spend a disproportionate share of limited investments on legal fees, but founders and investors focused on long-term value creation do not want unfair deal terms to skew long term economics. What Carlos and the Seed Summit investor base created serves as a first but major step towards transparency It is not meant to be completely prescriptive, but it creates efficiency in narrowing down what is standard and what is not and enables open community debate outside of the bilateral and often under-informed dialogue of founder and investor.” – Alex Hoye, Latitude Digital Marketing

— {Translated from the original in Spanish} “The publication of this document is a great help to all those entrepreneurs who have no experience using term sheets. Although the terms are still adjusted as needed for each investment, these guidelines give entrepreneurs a good idea of what is considered “common practice” for a term sheet. Another advantage is that it will also help reduce legal costs and accelerate the entire investment process. Especially in Spain there is very little knowledge about this subject, and many investors can dictate the terms as they see fit and that entrepreneurs are not able to compare different deals with what is considered common practice in the market. Even the best MBA candidates (all countries) have this problem, I myself I often see among my students in the IE.” – Martin Varsavsky, FON

— “The Seedsummit initiative to create a investor documentation template is to be congratulated, we have found it to be very helpful.”   – Paul Flanagan, Tequila Mobile

— “The Seedsummit Termsheet is a great tool not only for startups raising money from the investors who use it, but for any other startup raising seed money in Europe. It provides a benchmark which will make it very difficult for investors to negotiate the draconian terms that have popped up far too frequently in recent years. The terms of your first investment set the precedent for investors over the rest of your company’s life so it’s critical to get these right.” – David Langer, Groupspaces

Adding transparency to the European seed market

This time last year, we held the first Seedsummit in London. The idea behind it was to help to create a forum for active European seed investors to connect and establish a stronger more cohesive network to support entrepreneurs. Now 12 months later – we are ready to take the wrappers off Seedsummit.org.

Recently, Seedcamp has been sharing lots of news about growing our team and adding firepower for our international platform. We have a stronger foundation to help the companies and founders that are at the stage where Seedcamp is a good fit. We have always helped Seedcamp companies gain access to further capital and so many other entrepreneurs have always reached out to us frustrated at how difficult it is to identify true seed stage investors in their local regions and across Europe or US with whom there is a fit.

Enter Seedsummit.org. Like Nivi and Naval’s excellent AngelList, we aim to be a resource to connect entrepreneurs and local seed investors looking to find each other. The investors on Seedsummit.org are qualified, active in seed and they are looking for deals. While we don’t have the density of either the VC or angel money available in the Valley, there is still an emerging group of very active seed investors in the markets that Seedcamp is local in, from Union Square to Mumbai.

Given many Seedcamp companies raise their post-Seedcamp funding from these very investors like Jeremie Berrebi, Sherry Coutu, Alex Hoye, Stefan Glaenzer, Dave McClure and Robin Klein, we have gotten to know our fellow travelers well. Seedsummit.org is a first step. As with Seedcamp, we will look to all of you to help us iterate and make sure we can serve entrepreneurs and investors best in their quest to find the right partners. So, please do have a look and play around and feed back to us as much as possible.

There is a dedicated space for both investors and entrepreneurs on the site.  We will be adding more useful features and content soon, along with connecting with our friends in other places putting together a similar platform. But we hope this is a very helpful start for all of you to get better connected and funded.

In addition, we will host two full Seedsummit events for active angel and seed investors this year. The first will be taking place in January, right after our just announced Seedcamp London. Following our first North American Event in June, we will host a Seedsummit in New York City aiming to connect Seed investors across the Atlantic. We are looking forward to a great 2011, and Seedsummit.org will be a large part of it!

We also want to point out our technology partner Lateral, who helped us out with the development and review of the site. Ciprian and his team are an important part of the inception of  Seedsummit, and we are looking forward to work together on the future changes to the site to develop an even greater experience for both investors and start-ups.