UK 2026 Term Sheets: AI, Deeptech Gain Founder Leverage
31 Aug 2026
HSBC Innovation Banking's newly released 2026 Venture Capital Term Sheet Guide offers a data-backed look at how UK startup funding is evolving—and the signals point toward AI and deeptech founders gaining unusual negotiating power.
What the data shows
According to the guide, larger deals now make up 31% of all term sheets in 2026, up from 26% in 2024. That shift suggests capital is consolidating around bigger checks, even as seed-stage activity remains active in specific sectors.
One notable data point: over 50% of seed deals in life sciences, cleantech, and energy now happen outside London, hinting at a broader geographic spread of early-stage investor interest across the UK.
The report also highlights GeoSurge's $12m seed round as a recent example of active fundraising activity, though no further detail on the company's sector or investors was included in the report.
AI and deeptech: a founder-friendly shift
According to the guide, AI and deeptech companies are increasingly commanding stronger terms from VCs. Glen Waters, quoted in the report, noted that "founders in deeptech sectors are able to command a premium and terms are often founder-friendly."
Francisco Vigo, also cited, emphasized the value of competitive dynamics in fundraising: "The moment you have multiple term sheets, you can negotiate your terms much better." He also advised founders to "go for a massive market and go big"—a signal that ambition and market size remain central to attracting favorable terms.
Despite the AI/deeptech momentum, the report notes that fintech and life sciences remain two of the largest areas of venture investment in the UK, suggesting these sectors continue to anchor the broader funding landscape even as newer categories gain attention.
The EIS angle
The report also points to the Enterprise Investment Scheme (EIS), which offers 30% income tax relief on investments up to £1m per tax year. This remains a relevant lever for early-stage UK ventures, potentially sustaining angel and seed investment appetite even amid larger-deal concentration trends.
Why founders should care
- The rise in larger deals (31%, up from 26%) may indicate that capital is increasingly favoring later-stage or well-positioned startups, which could make early-stage fundraising more competitive for less-established founders.
- Founder-friendly terms emerging in AI and deeptech suggest these sectors may currently offer founders more leverage than in past cycles—though this may not extend uniformly across all subsectors.
- Seed activity concentrated outside London (50%+ in life sciences, cleantech, and energy) could suggest emerging opportunities for founders based outside traditional hubs, though the report does not clarify why this regional pattern exists.
- Access to EIS relief likely continues to support investor appetite for UK early-stage deals, which could be a relevant consideration for founders structuring fundraising rounds.
- As Vigo notes, having multiple term sheets in play may meaningfully strengthen a founder's negotiating position—suggesting that generating investor competition, where possible, remains a practical fundraising strategy.
What's missing
The report does not specify which deeptech subsectors are considered most promising, nor does it define how "founder-friendly terms" are measured. Comparative funding figures between AI/deeptech and fintech/life sciences are also not provided, and details on GeoSurge's sector, valuation, and investor base remain unclear. Founders should treat these findings as directional signals rather than precise benchmarks.