The 2025 HSBC Innovation Banking Venture Capital Term Sheet Guide signals a crucial shift in how founders should approach funding. At VSQ Legal, we believe founders need more than legal templates — they need practical, fast and fearless advice that puts them in control.
Here's what matters and why.
Why This Guide Changes the Game
Raising VC isn’t just about pitching well — it’s about knowing what’s in the term sheet and why it matters. HSBC’s guide is an attempt to define the “market standard” for venture deals, providing transparency around terms that shape equity, control and exits.
It’s based on 588 term sheets from UK deals, covering over 33% of the market by volume. In other words, it’s as close to a market pulse as you’re going to get right now.
Key Trends and What Founders Need to Watch
1. Standardisation Is Here, But Not Always on Your Side
The term sheet template reflects market norms, but many of those norms lean toward protecting investors. Participating liquidation preferences, full ratchets and board-heavy governance still show up regularly in Series B and later.
VSQ Insight: “Standard” doesn’t mean untouchable. Every line is negotiable if you understand what you’re giving up.
2. ESG Clauses Are Gaining Ground
The guide notes a steady rise in ESG terms across deals, especially around DE&I. While still not universal, they’re increasingly expected in funded companies.
VSQ Insight: If ESG is part of your story, make sure it’s reflected in the term sheet — not just the pitch deck.
3. Founders Are Retaining More Control at Seed
At Seed and early Series A, founder-friendly terms remain dominant — especially non-participating preferences and founder vesting on founder terms.
VSQ Insight: Use this window. As you move upstream, the leverage shifts. Nail your cap table and governance now while the balance is in your favor.
4. SAFEs and ASAs Are Converting More Cleanly
Convertible instruments have become more mainstream, and their conversion mechanics are better understood by UK investors. The guide reflects more structured approaches to discount rates, valuation caps and triggers.
VSQ Insight: Don’t treat convertibles as casual cash. They’re deal-defining documents and should be treated with the same precision as equity rounds.
Practical Moves to Make Now
If you're planning to raise in 2025, this is the time to upgrade your legal infrastructure. Here’s what we recommend:
- Model dilution across multiple rounds and instruments
- Standardise investor communications with a clean, founder-friendly term sheet
- Prepare your due diligence pack before you even pitch
- Align vesting, governance and IP assignments before term sheets land
- Get early feedback from founder-side counsel to understand where to push back
How VSQ Legal Helps
We work with fast-growing startups and investor-backed companies who don’t have time to wade through legal red tape. Whether you’re raising your first institutional round or renegotiating investor control rights, we give you:
- Deal-specific legal advice grounded in the current VC landscape
- Founder-first drafting of term sheets, shareholder agreements and ASAs
- Clear breakdowns of dilution, liquidation, anti-dilution and vesting terms
- The speed, agility and context that in-house counsel usually can’t match
Get Ahead of Your Raise
Read the full HSBC 2025 VC Term Sheet Guide here. Then talk to us. We’ll help you move fast, negotiate hard and protect what you’ve built.
VSQ Legal — Legal for founders who don’t have time to learn the hard way.
