The term sheet clause that can cost you R4.5m
The first side-by-side of South African, UK, European and US term sheets across 15 clauses, plus the 14-point checklist to take into the room. Free when you subscribe.
- 96%of US deals use the same preference clause
- 42%of UK term sheets still ask founders for warranties, down from 75%
- 0public datasets of African deal terms. Until now.
Get the free guide
20 pages. Instant PDF. For founders, buyers, sellers and funders.
Five things this guide tells you before you sign
Most term sheets look the same until the exit. The differences sit in a handful of clauses, and in the African issues Western guides never cover.
1. One clause can cost you R4.5m
See the worked example: the same R10m investment, two preference clauses, and who gets what on a R30m exit.
2. Africa is not an outlier on the economics
Preference and anti-dilution standards match across South Africa, the UK, France and the US.
3. The real African risks sit elsewhere
Reserve Bank approval, currency settlement, State interests and competition-law vetoes.
4. Some drafting leans towards investors
Forced-sale rights from year seven and bad-leaver forfeiture at nominal value are both negotiable.
5. Nobody publishes the African numbers
We say exactly what the data can and cannot tell you, with every source named.
Plus: a 14-point checklist
A one-page list to print and take into the negotiation.
Participating preferred moves R4.5m to the investor
On a R30 million exit with a R10 million investment for 22.7%, a non-participating preference pays the investor R10.0m. A participating preference pays R14.5m. The founders and other holders get R4.5m less. The guide shows you how to spot it, what to ask for instead, and what is standard in each market.
Get the full guide
Sources: UK benchmark guide (2024 data), US venture financing report (Q2 2026), South African model documents (2025), Southern Africa term sheet guidelines (2021), Galion term sheet v2.1. Full list in the guide.
The checklist founders print and take into the room
A sample of what is in it:
- Valuation is stated as pre-money or post-money, with the fully diluted base attached.
- The preference is 1x non-participating, proved in a worked exit example.
- Anti-dilution is broad-based weighted average, with no full ratchet.
- …and 11 more points, from vetoes and leavers to Reserve Bank approval.
Who it is for
Founders raising capital
Know what is standard before you negotiate.
Sellers and buyers of businesses
Drag-along, warranties and exclusivity apply to a sale as much as a raise.
Funders and co-investors
See where your template departs from the market.
Corporate finance partners
Where deals stall, and how we handle them.
Read it before you sign
Free for subscribers. Written by the team that advises on capital raises above R1 million and M&A from R4.5 million (US$250,000) across South Africa and sub-Saharan Africa.
Get the free guideGeneral information only; not legal, tax or investment advice. All data is secondary, from published reports and model documents; no percentage describes African market prevalence.