Your term sheet is also a job description

Published: 06.08.2026 | Author: Ray Nicholls | Category: Insight — Boards & Investors

HSBC Innovation Banking published its 2026 VC Term Sheet Guide earlier this year, drawn from a large sample of completed UK term sheets. It prompted a thought I've had for a while.

What struck me wasn't the terms themselves. It was how rarely those terms find their way into the conversation about who runs the finance function afterwards.

I've watched this sequence play out many times. A board spends six weeks negotiating structure. Every clause is argued over. Lawyers on both sides. Long calls, late drafts, real money spent on getting it right.

Then, three or four months later, the same board sits down to hire a Finance Director and describes the role in entirely generic language. Strong technically. Commercially minded. Good with investors. Someone who can build a team.

The two conversations never meet.

They should. Because the terms a company signs go a long way towards defining the finance function it now needs to build.

Structure creates work

The current market is more structured at the early end than it was three or four years ago. Preference shares are close to universal. Anti-dilution provisions are common. Rounds are increasingly syndicated, with several investors around the table rather than one.

Every one of those features lands somewhere. Usually on the finance function.

A cap table with multiple share classes, different preferences and a ratchet sitting behind them is no longer something a company can hold in a spreadsheet and half-understand. Someone has to model the exit waterfall properly. Someone has to be able to tell a management team what their options are actually worth under three different outcomes, and be right.

That's a specific capability. It isn't the same as being a strong technical accountant, and it isn't automatically present in someone who has run finance for a business with a clean, simple ownership structure. I've interviewed excellent Financial Controllers who have never seen a liquidation preference. That's not a criticism of them. It's a mismatch that only becomes visible when it's too late to fix cheaply.

Consent rights turn reporting into an obligation

Board representation and investor consent rights are now standard in most institutional rounds. In practice that means a defined list of decisions the company cannot take alone, and a reporting rhythm that has to be met rather than aspired to.

This changes the nature of the finance role more than most boards anticipate.

Reporting stops being an internal management tool and becomes a governance obligation with an audience that has rights attached. Numbers need to arrive on time, in a consistent format, with the variances explained before anyone asks. A board pack that is late and defensive costs a company credibility that takes a long time to rebuild.

The finance leader who thrives here is the one who has done it before under scrutiny. Not necessarily the most technically gifted candidate in the process, but the one with the temperament for a monthly cycle that doesn't slip.

Secondaries have made finance the custodian of employee value

With IPO markets subdued, secondaries have become a routine part of how liquidity happens. Early investors and employees take some money off the table while the company stays private for longer.

This is generally good news. It is also a significant amount of unglamorous work, and it sits with finance.

Share valuations. Employee communications that are clear without straying into advice. Tax treatment. Option scheme mechanics. A data room that stands up to a buyer's diligence. Managing the emotional reality that some people in the business are about to receive a life-changing sum and others aren't.

Boards rarely price this in when they write the job specification. Then a secondary process arrives, the finance team is already at capacity, and the choice is between doing it badly or paying advisers to do what an experienced hire would have handled internally.

Overseas capital changes the specification

More UK growth rounds are being led by investors headquartered outside the UK, particularly in the US.

That has a direct effect on what a board should be looking for. US-led investors bring their own reporting conventions, their own board rhythm, and often an expectation of quarterly discipline that is tighter than a UK founder is used to. Sometimes there's a group structure to manage, or a US entity, or a transatlantic audit relationship.

None of that is difficult for a finance leader who has lived it. All of it is a slow, expensive learning curve for one who hasn't.

If a board can see the likely shape of the next round, the finance hire should be made with that round in mind, not the last one.

Longer gaps between rounds move the emphasis to FP&A

The other consistent signal in the market is that capital is available, but selectively, and against evidence rather than narrative. Investors are looking at revenue quality and a route to profitability, not growth alone. Gaps between rounds have lengthened.

Boards tend to respond to this by looking for a CFO who can fundraise. I'd argue the more valuable hire, in most cases, is the one who can make the runway last long enough that the fundraise happens from a position of strength.

That's an FP&A capability, and it is chronically underweighted in mid-market finance teams. Rolling forecasts that people actually believe. Scenario planning that informs decisions rather than decorating a board pack. Unit economics understood at a level of detail that survives contact with an investor's analyst.

A company with that capability negotiates better terms next time. A company without it negotiates from whatever position its cash position leaves it in.

What I'd take from this

If you're on a board that has recently signed, or is about to sign, a structured funding round, the useful exercise is a short one.

Read the term sheet again with the finance function in mind. Ask what each significant clause will require of somebody, month by month, for the next two years. Then compare that list against the person currently doing the job, and against the specification you're about to take to market.

Most of the time the gap is narrower than feared and can be closed with a targeted addition to the team rather than a change at the top. Occasionally it's wider, and it's much better to know that in month two than in month fourteen.

The terms are negotiated once. The finance function lives with them every day afterwards.

When your last round closed, did the conversation about terms and the conversation about the finance team ever happen in the same room?Ray Nicholls is the Founder of Pitch Hill Partners, a boutique executive search and interim management firm specialising in CFO, Finance Director, Financial Controller and FP&A placements across the UK.