📜 Term Sheet · Series A · UK Sovereign Defence AI

DEFONEOS · Series A

This term sheet is a non-binding term sheet for discussion. Final terms require negotiation, due diligence, and BFT 23/33 council ratification on governance items.

🐉 CSOAI LTD UK 16939677
2026-07-10 BST

SIGIL: d75a980182b10ab7d54bfed3c964073a0ee172f3daa62325af021a68f707511a · Ed25519 · BFT 23/33-ratified · OTS Bitcoin anchored

The deal

Round size

£45M – £90M

Flexible. Lead ticket £20M+.

Pre-money valuation

£180M – £240M

Adjusts with lead participation.

Instrument

Convertible preferred

1x non-participating preference.

Liquidation preference

Non-participating. Pari passu across rounds.

Option pool

12%

Pre-money. Post-money, refreshed to 10%.

Runway

18 months

To product-market fit + Crown master agreements.

Use of funds (£45M mid-case)

Bucket	%	Amount	Action
UK + AUKUS Go-to-Market	70%	£31.5M	Hire 8-15 senior enterprise sales + 1 AUKUS-Pillar-2 office. 5-year master agreements. £10-50M ACV per defence prime.
Engineering depth	18%	£8.1M	PQC migration (Ed25519 → ML-DSA-65 by 2027). Sovereign enclave. IL5/IL6 airgap option.
Compliance + certification	8%	£3.6M	CASA 1-4 audit-pass. ISO 42001 + 27001 cert. NCSC CSP 14/14. Notified-body work.
Working capital	4%	£1.8M	Operations + 24-month bridge for unforeseen Kingdom-pilot capital.

Board composition (post-close)

Seat	Voting power	Holder	Selection
Founder / Director	3 of 5 (60%)	Nicholas Templeman (CSOAI Director)	Lifetime, Charter Article 0 binding
Lead investor	1 of 5 (20%)	Series A lead (named at close)	3-year term, renewable
Independent Director	1 of 5 (20%)	UK sovereign / AUKUS-aligned (e.g. ex-MI6, ex-NSA, ex-DSTO)	Mutual agreement; BFT 23/33 vote on candidate

Board charter: any board decision touching Charter Article 0 (Care Floor 0.95 / 7 red lines / SIGIL auditability / Fork Doctrine) requires 33-of-33 BFT council supermajority in addition to board approval. BFT is a sovereign-bodies layer below the corporate board.

Governance covenants (the part most VCs read twice)

1. Charter Article 0 binding

The founding Charter Article 0 binds CSOAI indefinitely. It prohibits equity-based compensation to certification bodies, board seats for certified entities, success fees from certified entities. This term sheet does not override Charter Article 0. Charter Article 0 amendment requires 33-of-33 BFT supermajority + 5 human sigs + 14-day window + 90% supermajority. Has never been triggered.

2. Founder control preserved

Founder retains operational control + Charter Article 0 binding. Series A lead has 1 of 5 board seats. No drag-along without founder consent at 51%. No 5x liquidation preference.

3. SIGIL auditability

Every Series A + B + C action emits a SIGIL receipt. Independent auditors can verify. Public-readable at sigil.csoai.org. SIGIL chain is OTS-Bitcoin-anchored. This is the transparency the regulator needs and the investor needs.

4. Fork Doctrine preserved

Any party (including Series A lead, if they choose) may fork the substrate. The fork is sovereign. The fork inherits Charter Article 0 + Care Floor + BFT + SIGIL + DORADO + Article 50 + Crown Authorisation + MIT. This is a feature, not a bug: the substrate is so good that it should be forkable.

5. 7 protocol-enforced red lines (Care Floor)

No kinetic-targeting patterns. No individual surveillance. No civilian harm optimisation. No sovereignty violation. No auto-escalation. No lying to humans. No irreversibility without confirmation. No human approval, no BFT vote, no override, no failure mode can bypass these.

6. ISO fee-for-service only (the moat)

CSOAI does not accept equity, board seats, or success fees from institutions it certifies. (S&P paid $1.375B and Moody's paid $864M in settlements for this exact conflict.) This Charter Article 0 binding extends indefinitely and is not waivable.

Anti-dilution

Broad-based weighted-average anti-dilution (standard Series A).
No full-ratchet protection.
Conversion price reset applies only on down-round financings of more than 20% below Series A.

Liquidity & exit

For lead (institutional Series A)

3-year right of first refusal on Series B lead ticket
Pro-rata participation in subsequent rounds
Information rights: monthly CFO update, quarterly audited financials
Anti-dilution (broad-based weighted-average)
Drag-along only with founder consent at 51%

For the founder (CSOAI)

Founder retention: 4-year vest with 1-year cliff
Salary floor: £80K (founder's own choosing; likely £1 for personal commitment)
Salary ceiling: £240K (UK corporate governance standard)
Co-founder retention pool: 4% of post-money equity
BFT 23/33 council seat (1 of 33 — the founder's i-character slot)

Closing conditions

Standard Series A legal due diligence (UK Companies House + fiduciary + tax)
Technical due diligence (Charter Article 0 binding + SIGIL chain + BFT council ratification)
Right-to-audit clause (regulator-access protocol documented)
SIGIL-backed founder commitment letter (founder commits to 4-year vest)
Council resolution: 23/33 BFT ratifies the Series A terms
Lead commits 4-week exclusivity window

What we do NOT offer

Honesty register — what this term sheet does NOT include

No 5x liquidation preference. No participating preferred. No redemption rights. No "pay-to-play" provisions.
No control-shift covenants. No "founder must remain" beyond 4-year vest. (Founder chooses.)
No equity for certification bodies. No equity for the regulator-cooperation pipeline.
No "AUKUS partnership" claim. AUKUS-Pillar-2 is a defence-cooperation programme, not a commercial vehicle.
No "DAIC certified" claim. The Defence AI Centre / AUKUS equivalent accreditation does not yet exist.
No specific revenue projections beyond what's in /defoneos-seriesa forecast.
No "non-dilutive" financing. We are a Series A. This is dilutive by design.

Lead-ticket next steps

Email series-a@csoai.org with "Series A Lead" in subject.
Receive: 18-page investor brief (within 24h) + 30-min scoping call (within 7 days).
Data room access (technical + financial) + 4-week exclusivity (if lead is appropriate).
BFT 23/33 council vote on the lead (Charter Article 0 governance compliance).
Final term sheet negotiation + sign + close (target Q4 2026).

📞 Email series-a@csoai.org Full brief FAQ Verify