Convertible Debt Terms – Survey of Market Trends 2019

Image Convertible Debt graph


Convertible debt financing continues to be an enormously popular method of fundraising for startups.

In this report, Fenwick has analyzed more than 100 of our issuer-side convertible debt transactions covering a 15-month period from January 1, 2018 through March 31, 2019. The data includes a survey of terms for first money and both early- and late-stage bridge deals.

It provides insight into what is market in convertible debt terms and will be of interest to founders, board members and investors.

Key findings include:

  • Year over year, deal sizes have continued to increase. The median overall deal size this year is up 14%, from $1.4 million to $1.6 million.
  • Conversion discounts are increasingly common, even in later-stage debt issuances, as is the practice of pairing the discount with a valuation cap.
  • In change-of-control situations, such as the sale of a company, most deals provide for a premium payout that is a multiple on top of the repayment of the principal balance. The number of deals giving a premium, as well as the median premium amount has remained steady year over year; however, this year the low end of the premium spectrum dropped from 25% to 10%.
  • Only 11% of deals used a valuation cap as a standalone provision in the absence of a conversion discount.