AETHERION Worldwide is the fundraising and landing practice of AETHERION Capital.
How do European and US term sheets differ?
Less than founders expect on the core economics, more than they expect around them. According to Orrick's 2025 European deal data and Cooley's quarterly report, a non-participating liquidation preference at one times the investment is standard on both sides. The visible differences are ESG terms, the convertible instruments used, and employee option practice.
Founders arriving from the United States or from Asia often expect a European term sheet to be a different animal. On the economics it usually is not. Where the two markets separate is in the clauses around the money: what has to be reported, which instrument is used before a priced round, and how employee options are written.
The table sets out what each of the two published sources actually reports. They are different samples measured in different ways, so read the columns side by side rather than subtracting one from the other. This is general information about market practice, not legal or investment advice.
| Term | European financings in 2025 | Financings reported by Cooley, first quarter of 2026 |
|---|---|---|
| Liquidation preference | Non-participating at one times the investment in 77% of financings; participating in 1% | A preference at one times the investment in 98.2% of deals; non-participating preferred stock in 96.4% |
| No preference at all | 14% of financings, mostly at the earliest stages | Not reported separately |
| Anti-dilution | Broad-based weighted average in 80%; full ratchet absent from the 2025 sample | Not reported separately |
| Round outcome | Not reported in this form | Up rounds 86%, flat rounds 2.6%, down rounds 11.4% |
| ESG provisions | In 56% of investment documents, up from 39% in 2024 | Not reported separately |
| Option pool top-up | In 65% of financings, carved out of the pre-money valuation 82% of the time | Not reported separately |
Sources:
Orrick, Deal Flow 6.0, European Venture Capital Deal Term Review 2025 to 2026, pages 23 and 25
Cooley, Q1 2026 Venture Financing Report
What the two samples actually are
The European column comes from Orrick's review of more than 400 venture and growth equity investments its clients completed in Europe during 2025. The other column comes from Cooley, which reported 165 venture financings representing 39.9 billion dollars of invested capital in the first quarter of 2026.
Different periods, different sizes, different definitions. Orrick counts a preference at one times the investment without participation as a single combined category. Cooley reports the multiple and the participation as two separate percentages. That is why the 77% and the 98.2% are not the same measurement, and why the difference between them is not a fact about the two markets.
A third source points the same way on one point. Carta, the US equity management platform, whose data covers equity rounds raised in dollars by companies based in the United States, put the down-round rate at 11.4% in the first quarter of 2026, the same share Cooley counted in its own financings.
Sources:
Orrick, Deal Flow 6.0, European Venture Capital Deal Term Review 2025 to 2026, page 10
Cooley, Q1 2026 Venture Financing Report
Carta (US), State of Private Markets: Q1 2026
Where the two markets look alike
On the clauses that decide who gets paid what. A non-participating preference at one times the investment is the standard in both columns, which means the investor takes back the money invested or converts to ordinary shares, but not both. Orrick reports that participating preferences, which do both, dropped to 1% of European transactions in 2025 from 7% a year earlier, and Cooley reports non-participating preferred in the overwhelming majority of its financings.
Anti-dilution follows the same pattern in Europe: broad-based weighted average protection in 80% of financings, with full ratchet, the harshest version, absent from the 2025 sample altogether.
Sources:
Orrick, Deal Flow 6.0, European Venture Capital Deal Term Review 2025 to 2026, page 23
Cooley, Q1 2026 Venture Financing Report
Where they differ
Three places, all of them outside the headline economics.
ESG provisions. Orrick reports these in 56% of European investment documents in 2025, up from 39% in 2024 and 31% in 2023, and links the rise to what European institutional investors require of the funds they back. Cooley's quarterly report does not track an equivalent term. For a company from outside Europe this is usually the first clause nobody in the room has negotiated before.
The instrument before the priced round. Orrick describes the SAFE as the more traditional route in the United States, following standard forms there, while European rounds have run on convertible loan notes and advance subscription agreements, with SAFE concepts now appearing in them. The economics can end up similar, the documents do not look similar.
Employee options. Orrick compares its UK sample with US practice directly: in the United States, performance conditions on employee stock options are relatively rare and time-based vesting is the norm, while in the UK performance conditions are at times more commonly applied, and leaver definitions remain more detailed and more protective of the employer.
What neither source settles
The things that matter most to a company whose parent sits outside Europe. Which law the documents are written under. Which entity signs them. Whether the shares being issued exist in a register a Dutch notary keeps or in a company register on another continent. Who sits on the board and what that board can decide without the shareholders.
None of those appear in a deal-terms dataset, because they are not terms: they are consequences of how the group is put together. That work happens before a term sheet, and what it has to survive afterwards is set out in what European investors check in due diligence. Whether a European entity is needed at all is in do you need an EU company to raise in Europe.
Two clauses in the table above do most of their work through the cap table rather than through the term sheet. What the option pool does to a founder's stake is in how much equity a seed round costs, and what anti-dilution reacts to is in what a down round is.
Sources
- Orrick, Deal Flow 6.0, European Venture Capital Deal Term Review 2025 to 2026 (PDF), checked 22 September 2026
- Cooley, Q1 2026 Venture Financing Report, checked 22 September 2026
- Carta (US), State of Private Markets: Q1 2026, checked 22 September 2026
Checked on 22 September 2026. This page is general information, not legal, tax or investment advice. Rules change: check the official source, or ask an adviser, before you act on it.
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