What a term sheet is, and how much of it binds
A term sheet is a few pages that settle the commercial deal, so the definitive documents can be drafted against a fixed target. Norwegian law offers it no safe harbour. Agreements bind regardless of form (Norske Lov 5-1-1 and 5-1-2, with the offer-and-acceptance rules in avtaleloven), and there is no statutory category of “term sheet” that is automatically non-binding.
So wording and conduct decide. A document headed “non-binding” that sets out complete terms and is followed by performance can bind, and a document that says nothing about its own status invites the argument. Bad-faith conduct in negotiations can also ground pre-contractual liability under Norwegian case law, even where no contract was concluded.
The standard drafting response is to state that the document is not binding, then name the clauses that are: exclusivity, confidentiality, cost allocation, governing law and disputes. Those clauses have legal effect from signature, so read them as the contract they are.
The term sheet also pre-commits things that only the general meeting can enact. Price, amount, subscription deadline and payment deadline are resolved under aksjeloven § 10-1, by the same two-thirds majority that governs an articles amendment, and the existing shareholders’ pre-emptive right to subscribe is set aside by the same majority (§ 10-5).
Norway has no national model round document set of the kind the UK has in the BVCA models or the US in the NVCA set. The nearest thing is the SLIP and the associated templates published by Startuplab, and Norwegian practice adapts the international models freely.
The economic clauses
These clauses decide what your money is worth on the day it comes back. Price them as a set, because a concession in one is a price change in all of them.
| Clause | What it does, and what is standard | What to refuse or insist on |
|---|---|---|
| Round size and instrument | Names the amount raised and whether it is new shares or a convertible instrument. Standard is new shares in a priced round, or a convertible loan where the price is deferred. | A round size that does not reach a credible milestone. Tranches released against targets nobody has defined. |
| Pre-money valuation and price per share | Fixes the price and therefore the ownership split. Pre-money is stated in NOK with the resulting ownership shown as a percentage. | An ownership percentage quoted without the share count behind it. “Post-money” and “pre-money” used interchangeably. |
| Option pool | Reserves shares for employee incentives. In US and UK practice the pool is usually established before the round, so existing holders bear the dilution. | A pool sized without a hiring plan behind it. A pre-money pool is a valuation cut in disguise, so price it as one. |
| Liquidation preference (likvidasjonspreferanse) | Sets who is paid first on a sale or liquidation, and how much. Standard is one times non-participating: in PwC’s survey of 187 UK term sheets, 71 per cent of the preferences were non-participating and 97 per cent of those were set at 1.0x. It is also the default in the BVCA models. | Multiples above one times. Participating preference, which pays the preference and then shares the remainder again. |
| Anti-dilution | Adjusts your position if a later round is priced lower. Broad-based weighted average is the market-standard formula. PwC found an anti-dilution ratchet of some kind in 46 per cent of the same UK sample but did not publish the split between formulas; full ratchet is rare and associated with distressed rounds. | Full ratchet. In Norwegian angel rounds shares are usually ordinary rather than preferred, so the protection is often written as a share true-up or a subscription right; read which mechanism is actually on the page. |
| Founder vesting and leaver terms | Ties founder shares to continued service and defines good and bad leavers. A four-year schedule is the customary term; PwC found a vesting provision in 58 per cent of the UK term sheets surveyed but did not publish the schedule lengths. | A bad-leaver definition wide enough to catch ordinary resignation. The BVCA models removed resignation from that definition in their February 2025 update. |
Two Norwegian reference points frame the valuation conversation, and a term sheet that breaks either is asking a question about the next round as well as this one.
- Dilution of about 20 per cent a round, and almost never more than 25, is the working expectation.
- Norwegian practitioners look for founders still holding something close to half the company after a Series A. Carta’s US platform data puts the median founding team at 36 per cent of fully diluted equity by that point — a lower figure from a market where rounds are larger and dilute further, so treat it as the American end of the range rather than the Norwegian one.
The pre-money pool is US and UK practice, and Norwegian rounds go both ways. Read each term sheet on its own wording and price the pool wherever the document puts it.
Control and governance clauses
An angel cheque does not buy control, and a term sheet that pretends otherwise will not survive the next investor. Start from the statutory floor, since everything negotiated sits above it.
- More than a third of the votes and capital represented at a general meeting blocks articles amendments, capital increases, mergers and dissolution (aksjeloven § 5-18).
- A tenth of the share capital can force an extraordinary general meeting on a stated matter (§ 5-6).
The average European angel ticket was EUR 25,600 in 2024. Almost nothing an individual angel signs reaches those thresholds, so every governance right you want has to be written in.
| Clause | What it does, and what is standard | What to refuse or insist on |
|---|---|---|
| Board composition | Allocates seats between founders, investors and independents. The syndicate’s lead investor takes the investor seat where one is agreed; individual small tickets take an observer seat or nothing. | A board seat attached to a ticket too small to justify the work. The seat carries duties and liability, not just information. |
| Observer rights | Attendance and papers without a vote. The normal outcome for non-lead angel participation. | An observer right with no right to the board papers in advance, which is attendance without information. |
| Reserved matters | Lists decisions that need investor consent regardless of shareholding. Standard items are new share issues, changes to share classes, sale of the company or material assets, related-party transactions, borrowing above a threshold, and changes in the business. | A veto list long enough to stall ordinary trading. Insist on the issue-and-transfer items; concede the operational ones. |
| Information rights | Fixes what the company reports and how often. Standard is quarterly management accounts and an annual budget, plus the annual accounts. | Reporting promised but not specified. Name the documents and the deadlines. |
| No obligation to fund further | States that you are not committed to follow-on capital. Standard and usually uncontroversial. | Any wording that implies a soft expectation of follow-on money without saying so. |
What counts as standard here is network practice rather than a rule: an observer seat for a small cheque, a board seat where the money is large enough to carry the work that comes with it.
Share transfer clauses: pre-emption, tag-along and drag-along
These clauses are signalled in the term sheet and contracted in the shareholders’ agreement (aksjonæravtale) or, where they must bind the corporate plane, in the articles of association. They decide whether you can get out of the company, and whether you can be made to.
Pre-emption comes in two forms with different statutory homes. The two are routinely confused, and only the second protects you against an unwanted co-owner.
- The pre-emptive right to subscribe new shares in an issue (fortrinnsrett) sits in aksjeloven § 10-4 and is set aside by the general meeting for the round (§ 10-5).
- The pre-emption right on a transfer of existing shares (forkjøpsrett) sits in §§ 4-19 and following. By statutory default it triggers only after ownership has actually changed hands, with a two-month window to exercise. Agreements routinely convert that into an offer-first obligation, which is a drafting choice.
Aksjeloven contains no tag-along and no drag-along provision. Both exist only where contracted, so expect to be dragged and make sure you can tag.
| Clause | What it does, and what is standard | What to refuse or insist on |
|---|---|---|
| Board consent to transfer | Makes acquisition of shares conditional on company consent. The statutory default: consent decided by the board, and deemed given if refusal is not notified within two months (aksjeloven § 4-16). | Silence. If the articles waive consent, know it. |
| Pre-emption right | Lets existing shareholders take shares before an outsider does. Statutory default on transfer, commonly converted by agreement into an offer-first right. | A pre-emption clause that binds only the small holders while the large ones are exempt. |
| Tag-along (medsalgsrett) | Lets minority holders sell on the same terms when a majority sells. Contractual, and expected in any competent angel round. | Its absence. Without it a majority can sell itself out and leave you behind a new controlling owner. |
| Drag-along (medsalgsplikt) | Forces the minority to join a sale approved by a defined majority. Contractual, and normal, because buyers want the whole company. | A drag threshold set so low that a single holder can force a sale. A drag with no floor on price or equal terms. |
| Indirect transfers | Catches a change of control in a shareholder that is itself a company. Norwegian holders commonly own through personal holding companies, and selling the holding company moves the economics without touching the shares. | Transfer definitions that cover only direct transfers. Insist that indirect transfers count, or that the holding company accedes to the agreement. |
| Founder lock-in | Keeps founders committed for a defined period. Expected at angel stage and screened for before a term sheet issues. | A lock-in with no leaver mechanics behind it, which is a promise rather than a term. |
Process clauses
Most of these are the clauses made binding from signature, so they bind you before any money moves. Read them as a contract, and put a date next to anything that runs against the clock.
| Clause | What it does, and what is standard | What to refuse or insist on |
|---|---|---|
| Conditions to closing | Lists what must happen before money moves. Standard is satisfactory due diligence, legal review, the general meeting resolution and registration of the capital increase. | Conditions written so subjectively that the investor has an unpriced option to walk. |
| Warranties in outline | Signals what the founders and company will warrant later. Named in outline only; the catalogue is negotiated in the subscription agreement (tegningsavtale). | Silence on who warrants. The BVCA models moved to the company as sole warrantor in their February 2025 update, while Norwegian angel practice still commonly asks founders to warrant personally. |
| Exclusivity | Stops the company shopping the deal while diligence runs. A few weeks to a month for an early-stage financing; the 45 to 60 days seen in acquisitions does not belong here. Exclusivity is usual: PwC found a period specified in 79 per cent of the 187 UK term sheets it surveyed. | Exclusivity long enough to run the company out of cash, or with no diligence deadline attached to it. |
| Confidentiality | Protects both sides’ information. Binding from signature, and mutual. | One-way confidentiality in the investor’s favour, which reads badly and buys nothing. |
| Costs | Allocates legal and transaction costs. Each side bears its own at angel scale. | An uncapped company obligation to pay the investor’s legal costs out of the money just raised. |
| Governing law and disputes | Fixes law and forum. Norwegian law, with a named venue or arbitration. | Foreign law for a Norwegian company with Norwegian shareholders. |
Cap and claim period are negotiated on the facts of each round and settled later, in the subscription agreement. The exclusivity guidance above comes from UK survey data, which sets the shape of the term rather than a Norwegian norm.
Reading the whole: the trade-space
No clause in a term sheet has a value on its own. They price each other, so negotiate across the whole page and never one line at a time.
The clearest example is valuation against preference. A pre-money of NOK 30 million with a two times participating preference is a worse instrument than NOK 22 million at one times non-participating in every outcome except the largest exit, and the largest exit was never the risk.
The option pool works the same way. A pool carved out before the round is a reduction in the effective price, so restate a headline valuation quoted with a pre-money pool before you compare it with one that has none.
Anti-dilution runs in reverse. Accepting a high price because the anti-dilution clause protects the downside means the correction lands on the founders at the next round, at the moment when their motivation is the asset being financed.
Three packages recur in Norwegian angel rounds. Name which one is in front of you before you answer on any single clause.
- A clean priced round: one times non-participating preference and light governance.
- A convertible loan with a cap and a discount, where the price cannot be agreed.
- A high headline price carrying preference, ratchet and a large pre-money pool. Recognise this one on sight; it reads as a generous valuation and is not one.
Read a term sheet in this order. Stop where it fails, and say which step failed.
- Confirm the deal-breakers are already settled: the founders will genuinely work with angels, accept dilution, accept a lock-in, and the price is inside the range that makes the arithmetic work. If any of those is open, the term sheet is premature.
- Restate the price: share count, post-money, your percentage, and the pool moved to wherever the document actually puts it.
- Read the preference and the anti-dilution formula against that restated price. Anything beyond one times non-participating and broad-based weighted average is a price increase, so price it as one.
- Check tag-along, the drag-along threshold and the indirect-transfer definition. These three decide whether you can be left behind or forced out.
- Read the binding clauses (exclusivity, confidentiality, costs, governing law) as the contract they are, and attach a diligence deadline to the exclusivity period.
How hard you push on each point changes with experience. The standards stay the same.
- In your first rounds, hold the three standards (one times non-participating, broad-based weighted average, tag-along on the same terms as the drag) and concede the operational reserved matters.
- With several rounds behind you, offer the trade yourself: a lower price on clean terms. A participating preference you take at round one is the template the round-three lead will ask for, and it is the stack that costs you; the trade also spares the founders the anti-dilution correction at the next round.
- Leading a syndicate, take the board seat only where the ticket justifies the duties, get the observer papers for everyone else, and make each co-investor’s accession to the shareholders’ agreement a condition of closing.
From term sheet to definitive documents
Signature starts a sequence, and each clause lands in one of five documents. Knowing which tells you where to look when the drafts arrive.
- The shareholders’ agreement takes governance, reserved matters, information rights, transfer restrictions, tag-along and drag-along, founder vesting and leaver terms. It binds only its parties, so every new shareholder must accede to it as a condition of subscribing or acquiring shares.
- The articles of association take anything that must bind the company and successive holders on the corporate plane: share classes, consent and transfer restrictions.
- The subscription agreement takes the warranties, the conditions to closing, the payment mechanics and the completion deliverables.
- The general meeting resolution takes the amount, the subscription price, the subscription and payment deadlines and the rights attached to the new shares (aksjeloven § 10-1), together with the waiver of the existing pre-emptive right (§ 10-5).
- The registration closes it. Payment is confirmed, and the capital increase must be notified to Foretaksregisteret within three months of the subscription deadline. Miss it and the resolution lapses and subscribers are released (§ 10-9).
The term sheet has no legal force over any of those steps; its job is that nobody is surprised when the drafting starts.