Authors: Michael Grantmyre and Ryan Unruch

Convertible securities intelligence

New for 2025, this report includes an expanded analysis of terms related to convertible securities financings, specifically Simple Agreements for Future Equity (SAFEs) and convertible promissory notes. The data on convertible securities financings in the Deal Points Report draw on 240 financings Osler completed in 2024 and 2025, representing over US$1.3 billion in transaction value, and provide key deal terms and emerging market trends for these instruments.

Outside of pre-Seed financings, convertible securities are often used in the context of investors providing bridge financing to companies that require short-term cash injections to sustain working capital, where existing business metrics do not yield valuations consistent with the company’s financing stage (giving the company more time to grow into an appropriate valuation), or where investors are opportunistically investing in companies ahead of a future round to secure more favourable economics for their investment.

Total convertible securities financings, by number of deals and dollars raised, by quarter

For convertible securities financings captured by the Deal Points Report, the charts below show the total number of such convertible securities financings and the aggregate dollars raised in such financings during 2024–2025, by quarter and by security type (SAFE or convertible promissory note).

In 2025, SAFEs continued to represent the most common form of convertible security across all financings, accounting for 51.8% of all convertible securities issued, while convertible promissory notes represented 48.2% — it is important to note that these percentages are blended across all stages of financing, and a  deeper dive into the data shows that SAFEs were predominantly early-stage fundraising tools (pre-Seed, bridge post- Seed), whereas convertible promissory notes were more common in later-stage financings (as a bridge security to the next financing round).

Measured by dollars invested, the pattern reverses. In 2025, SAFEs accounted for 31.7% of total capital invested (compared to 11.6% in 2024), while convertible promissory notes accounted for 68.3% (compared to 88.4% in 2024). This divergence is consistent with the observation above: companies issuing convertible securities in later-stage financings, which typically result in the investment of larger amounts of capital, more frequently utilize convertible promissory notes, while earlier-stage financings, which typically result in the investment of smaller amounts of capital, continue to rely on SAFEs.

Number of convertible financings by quarter (2024 and 2025)

Dollars invested by convertible instrument, by quarter (2024 and 2025)

SAFE vs. convertible promissory note, by industry

In 2025, SAFEs dominated investment in the AI, information technology and fintech industries, accounting for 73.3%, 53.3% and 75%, respectively, of convertible securities used in these financings. However, data from the Deal Points Report shows that the health/life sciences and cleantech industries, in particular, exhibited a higher incidence of convertible promissory note usage, with 54.5% and 82.4%, respectively, of convertible securities financings in these industries in 2025 structured as convertible promissory notes. Interestingly, when looking at total dollars raised, a different picture emerges. Notwithstanding that 45.5% of health/life science convertible securities rounds were raised on SAFEs, 73.5% of the dollars raised by health/life science companies on convertible securities were raised on convertible promissory notes. Similarly for information technology companies, 46.7% of their convertible securities rounds were raised on convertible promissory notes, which represented 68.4% of the funds raised by information technology companies on convertible securities.

This aligns with expectations, particularly where companies in these industries are capital intensive and have longer-term investment horizons, often necessitating more structured investment instruments.

Distribution of SAFEs vs. convertible notes, by industry (2025)

Pre-money vs. post-money valuations cap convertible securities

Post-money SAFEs continued to dominate in 2025, representing 90.7% of all SAFEs issued in the data captured by the Deal Points Report, up from 81.2% in 2024. This trend reflects the continued adoption of the Y Combinator post-money SAFE structure, which provides greater certainty around dilution for both founders and investors. This data is also consistent with US data reported by Carta, where 88% of all early-stage SAFE rounds were on post-money SAFEs. For convertible promissory notes, the preference for post-money structures also increased in 2025, with 64.9% of convertible promissory notes using a post-money structure compared to 52.2% in 2024. This suggests a continued convergence in market practice, with convertible promissory note terms increasingly aligning with the post-money economics that are now standard in SAFEs.

SAFEs: pre-money vs. post-money split (2025)

Convertible notes: pre-money vs. post-money split (2025)

Valuation caps and discounts

The proportion of SAFEs including both a discount and a valuation cap increased to 58.3% in 2025 from 49.2% in 2024 (compared to 31% for the U.S. as reported by Carta), while the proportion of convertible promissory notes with both provisions decreased to 45.5% from 57.9% in 2024. This divergence suggests that SAFE investors are increasingly seeking layered downside protection through both mechanisms, while convertible promissory note investors may be accepting simpler structures in exchange for other terms such as interest accrual and maturity dates that specify when amounts owing under the convertible promissory note become due and payable to the investor. Our expectation is that practices will continue to converge with U.S. practice, where 61% of all SAFEs were issued with a valuation cap only.

2024 vs. 2025: percentage with discount and valuation cap for SAFEs

2024 vs. 2025: percentage with discount and valuation cap for convertible notes

Interest rates (convertible promissory notes)

The chart below reflects the median and average interest rates for convertible promissory notes in 2024 and 2025.

In 2025, interest rates on convertible promissory notes remained broadly consistent with 2024, with a median rate of 7.0% in 2025 and 8.0% in 2024. The average interest rate decreased slightly from 8.1% in 2024 to 5.9% in 2025, suggesting marginally more favourable pricing for companies in the current market.

As described in the “Methodology and Background” section, this analysis is limited to transactions through to Series Seed (inclusive).

Convertible notes: interest rates

Term (convertible promissory note)

The chart below reflects the median and average term for convertible promissory notes in 2024 and 2025. For convertible promissory notes, a term is the period of time during which a convertible promissory note is outstanding before the borrower is required to repay the total principal and interest due under the convertible promissory note.

The median term for convertible promissory notes remained constant at 24 months in both 2024 and 2025, with the average term decreasing to 26.2 months in 2025 (compared to 27.7 months in 2024).

As described in the “Methodology and Background” section, this analysis is limited to transactions through Series Seed (inclusive).

Convertible notes: term (months)

Discounts rates (SAFEs and convertible promissory notes)

This chart reflects the median and average discount rates for SAFEs and convertible promissory notes issued in 2024 and 2025. Discount rates determine the price per share of the issuer (and therefore the number of shares of the issuer) that the purchase amount of a SAFE or convertible promissory note converts into in connection with a conversion event — this price will be at a “discount” to the price per share ascribed to new shares issued by the issuer in connection with a conversion event.  In some cases, SAFEs and convertible promissory notes may have both a discount and a valuation cap (discussed further below) that each determine a price per share of the issuer (and therefore the number of shares of the issuer) that the purchase amount of a SAFE or convertible promissory note converts into in connection with a conversion event. In those circumstances, the holder’s applicable price per share is the lower of the discount price and the valuation cap price.

The median discount rate remained constant at 20% for both convertible promissory notes and SAFEs across 2024 and 2025, but average rates showed slightly divergent trends. For convertible promissory notes, the average discount increased from 20.2% in 2024 to 23.5% in 2025, while SAFEs showed a tightening range with the average decreasing from 20.4% in 2024 to 18.4% in 2025. This is consistent with Carta data which reports that 63% of all convertible securities included a 20% discount rate.

As described in the “Methodology and Background” section, this analysis is limited to transactions through Series Seed (inclusive).

Convertible notes: discount rates

SAFEs: discount rates

Valuation caps by series (convertible promissory notes)

This chart illustrates the median and average valuation caps for convertible promissory notes issued in 2024 and 2025. Valuation caps determine the price per share of the issuer (and therefore the number of shares of the issuer) that the principal amount and interest of a convertible promissory note convert into in connection with a conversion event. This price will be at a maximum “capped valuation” notwithstanding the valuation ascribed to the new shares issued by the issuer in connection with a conversion event. As discussed above, convertible promissory notes can have both a valuation cap and a discount. This concept applies equally to a SAFE, where the SAFE in question includes a valuation cap.

The valuation cap data for convertible promissory notes in 2025 show significant increases in median valuation caps at the pre-Seed stage. For companies with no prior financing, the median valuation cap increased from approximately US$5.1 million in 2024 to US$7.0 million in 2025. 

As described in the “Methodology and Background” section, this analysis is limited to transactions through Series Seed (inclusive).

2024 valuation cap by last series raised for convertible notes (USD)

2025 valuation cap by last series raised for convertible notes (USD)

Valuation caps by series (SAFE)

These charts reflect the median and average valuation caps for SAFEs issued in 2024 and 2025, by series.

For SAFEs issued in 2025, median valuation caps increased at the pre-Seed and post-Seed stages of financing, reflecting continued upward momentum on valuations. The median valuation cap for companies with no prior financing increased to approximately US$10.5 million from US$7.5 million in 2024, and companies at the Seed stage saw median valuation caps of US$23.0 million (compared to US$15.3 million in 2024). At the same time, average valuation caps grew at the pre-Seed stage between 2024 and 2025, while the average valuation caps for post-Seed stage companies dropped marginally between 2024 and 2025.

As described in the “Methodology and Background” section, this analysis is limited to transactions through Series Seed (inclusive).

2024 valuation cap by last series raised for SAFEs (USD)

2025 valuation cap by last series raised for SAFEs (USD)

Convertible securities amendment thresholds

This chart summarizes the amendment threshold applicable under SAFE and convertible promissory notes. In 2025, the most common threshold for both SAFEs (89.8%) and convertible promissory notes (86.4%) was that amendments can be completed with the approval of the holders representing a majority of the principal amount invested in the round, reflecting a continued shift away from the requirement to obtain the consent of each individual holder.

In practice, these amendment thresholds allow for holders representing a majority of the aggregate purchase amount (in the case of SAFEs) or principal and accrued interest amounts (in the case of convertible promissory notes) to approve amendments on behalf of all holders of the same series. This structure prevents individual investors from having an effective veto over amendments to a given issuance, while still requiring broad holder consensus and improving administrative efficiency.

SAFEs: amendment thresholds (2024 and 2025)

Convertible notes: amendment thresholds (2024 and 2025)

Acknowledgment

We gratefully acknowledge the help of our Osler Works – Transactional (OWT) team, in particular Natalie Munroe and Oren Kedmi, and our Business Analytics specialists, Andrey Serdyukov and Diana Lau whose contributions were critical to the completion of this report. We also wish to thank Jacques Du Plessis, a partner in Osler’s Emerging and High Growth Companies Group, based in Vancouver, who took the lead in preparing the data and narratives for the convertible securities intelligence section of this year’s Deal Points Report.

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