There is a term of art in Silicon Valley called "market terms", which are things which are sufficiently well-understood, precedented, and facially not-screaming

There is a term of art in Silicon Valley called "market terms", which are things which are sufficiently well-understood, precedented, and facially not-screamingly-unfair that 2+ sophisticated adults could reasonably agree to them in a business dealing. The term your investor has asked for is not a market term in seed rounds in Silicon Valley. I am understating for emphasis here. Seed stage investors typically accept the risk of the company blowing up; that's why they get to invest for cheap. There is no market term by which an investor gets to claw back seed funding. Whether this is relevant to you in Europe is tougher to say. After all, you don't necessarily have the pick of every investor in the world to do business with. But if you have the pick of at least one other investor, I'd strongly consider going with another investor over accepting a deal with this term of it. walking away is almost not an option given we had such a hard time with our fundraising Oof. So you have something they want (equity in a company) and they have something you need (cash money). If you don't want their investment on these terms (and you don't), counterpropose something else. A first counterproposal is simply "We like the deal outlined in the term sheet, but aren't amenable to these targets. Strike them and we'll execute" and see where life takes you from there. If they push back hard, then you're back to the negotiating table. (Which you shouldn't be, because you have a term sheet, but there are term sheets and there are term sheets.) What's the valuation at which they're happy taking risk commensurate with being a seed investor? If there is no valuation that they'll make a seed investment in, they're not a seed investor, and regardless of whether you think walking is an option or not you might have to consider walking. A danger with non-market terms is that every investor you ever deal with forever is going to see that term and then either a) run out of the conversation with you, because it suggests that you're either struggling or a pushover or b) deal with you excessively aggressively, because you're either struggling or a pushover. Another danger with accepting this term is that you're going to be dealing with this investor for the next 5 to 10 years of your life if everything goes well. Does this sticking you with this portend a healthy, mutually beneficial, cooperative relationship with this investor? I would suggest that it does not. Do you want this investor at the table when you e.g. have to go back to investors to organize a bridge round? When you need them to give a sliver back to secure a later investment? Heck, do you even want them at the table assuming you become an uncomplicated golden goose of a company, sure in the knowledge that they will not strangle you in attempting to extract their golden eggs?