Convertible Debt Terms – Survey of Market Trends 2019/2020


The convertible debt market has remained remarkably stable over the last 15 months, despite considerable economic uncertainty related to the COVID-19 pandemic. Fenwick’s latest Convertible Debt Terms – Survey of Market Trends analyzes more than 100 issuer-side convertible debt transactions covering the period from January 1, 2019, through March 30, 2020. Serving as a resource for startup founders, investors and others interested in convertible debt market trends, this report also includes a snapshot comparison of the full report period through Q2 2020.

Key Findings

  • Year over year, deal sizes are down slightly—from $1.62 million to $1.58 million—with the exception of late-stage deals.
  • Q2 2020, however, saw an increase in deal size and interest rate over the median from the 2019-2020 reporting period, likely a result of companies looking to extend their runway in response to COVID-19.
  • Conversion discounts remain the norm, even in later stage debt issuances.
  • Valuation caps remain standard practice for more than 80% of “first money” transactions, but drop steeply at later stages.
  • 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. In fact, as many as 68% of late-stage bridge transactions contain a change of control premium.

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