Deeptech founders in Europe are gaining unprecedented leverage to dictate favorable term sheets in 2026, reversing traditional venture capital power dynamics
Executive summary: Deeptech founders across Europe are increasingly dictating venture capital term sheets in 2026, securing favorable conditions such as higher valuations, reduced investor control rights, and founder-friendly liquidation preferences. This shift redefines the founder-investor power balance in high-risk, long-horizon innovation sectors, potentially increasing founder retention and long-term alignment but raising concerns about governance standards and future downside protection for investors.
Who is involved: Deeptech founders, European venture capital firms (notably Accel), limited partners investing in EU early-stage funds, and deeptech startups in AI, biotech, and advanced manufacturing.
Likely next: Continued founder-friendly term proliferation may lead to LP pushback for greater governance concessions, or trigger a market correction if valuation disparities with public comparables widen significantly.
The focal article highlights a structural shift in European deeptech fundraising where founders, particularly in capital-intensive sectors like AI, biotech, and quantum computing, are now able to set investor-friendly terms due to heightened investor competition and scarcity of viable deals. This marks a departure from the post-2022 downturn when VCs held superior negotiating power. The trend is reinforced by Accel’s $800m ninth early-stage Europe fund, signaling sustained LP confidence in the region’s innovation pipeline despite broader macroeconomic headwinds.
Timeline
- — Why deeptech founders are dictating term sheets in 2026 — and how you can secure a fair deal (Sifted — EU startups)
- — Accel raises $800m for ninth early-stage Europe fund (Sifted — EU startups)
Analysis — what this means
Likely next events
- Accel’s ninth early-stage Europe fund begins first close deployment by Q4 2026, targeting 15–20 deeptech Series A rounds
- EVCA to release Q3 2026 European VC barometer showing founder-friendly term adoption in deeptech exceeding 40% of deals
- European Investment Fund (EIF) to review eligibility criteria for deeptech fund-of-funds by January 2027 amid founder term concerns
Sectors affected
- European deeptech venture capital
- AI infrastructure startups
- European biotech scaling
- Quantum computing hardware
Regulatory implications
- No direct regulatory changes yet, but ESMA may monitor founder-friendly terms for systemic risk in venture capital under revised AIFMD Level 2 by 2027
- EU’s Innovation Fund may adjust co-investment terms to require standard governance protections in state-backed deeptech deals by late 2026
- National innovation agencies (e.g., BPI France, CDTI) reviewing term sheet standards for public co-investment to prevent adverse selection
Historical parallels
- Similar founder-power surge occurred in Silicon Valley AI deals during 2018–2019, preceding SoftBank Vision Fund peak valuations
- European biotech founder-friendly terms spiked in 2021 post-pandemic funding surge, later reversed in 2022 downturn
- Nordic cleantech saw founder-favorable terms in 2020–2021 due to green fund inflows, normalized by 2023 as LP scrutiny increased
Sources
- Why deeptech founders are dictating term sheets in 2026 — and how you can secure a fair deal — Sifted — EU startups
- Accel raises $800m for ninth early-stage Europe fund — Sifted — EU startups