Why it matters
Non-competes against founders are aggressive. Most jurisdictions are tightening enforceability (California has long banned them; the FTC moved to ban most US non-competes in 2024; the UK has signalled significant reform). Even where enforceable, the in terrorem effect is real: a 12-24 month non-compete makes you unfundable as a competing founder, gives your old investors leverage in any departure negotiation, and can chill your ability to even take a senior role at any company they consider adjacent.
How to negotiate
First, push to remove. If the firm insists, narrow it: maximum 6-9 months, limited to direct competitors (named or by very specific market definition), automatic termination on involuntary termination without cause, geographic scope only where the company actually operates, and explicit carve-outs for unrelated industries. Get a non-solicit clause separately — it's a much narrower instrument and addresses the legitimate concern (you taking the team) without the broader career restriction.
Example language
How this clause typically appears in a term sheet. Read it carefully — predatory language is often buried in routine paragraphs.
For a period of twenty-four (24) months following the termination of employment for any reason, no Founder shall directly or indirectly engage in any business that competes with the Company in any geography in which the Company operates.
TURNSHEET provides intelligence, not legal advice. This page describes typical market behaviour and common negotiation tactics; your specific deal may have nuances that change the analysis. Always review your term sheet with qualified legal counsel before signing.