What should the maturity date of the convertible note be?
Takeaway: The maturity date of a convertible note is a delicate balance; it must be long enough to give you a realistic runway to raise your Series A, but not so long that your early investors feel their capital is tied up indefinitely.
The maturity date is the single most important feature that distinguishes a convertible note from a SAFE, and it is the primary source of risk for a founder using this instrument. Because a convertible note is legally a loan, it must have a term—a date on which the loan comes due if it has not yet converted into equity.
This "ticking clock" creates a hard deadline for your startup. You must raise a priced financing round that triggers the note's conversion before the maturity date arrives, or you will be forced into a difficult renegotiation from a position of weakness. Choosing the right maturity date is therefore a critical strategic decision.
The Market Standard: 18 to 24 Months
While the maturity date is a negotiable term, the startup ecosystem has largely settled on a standard and well-understood range. The vast majority of seed-stage convertible notes have a maturity date that is between 18 and 24 months from the date of the investment.
The Rationale: This timeframe is considered a reasonable and fair period for an early-stage company to use its seed capital to build a product, achieve meaningful traction, and get into a strong position to raise its next round of financing.
The Founder vs. Investor Perspective
Founders Prefer a Longer Term: As a founder, you will almost always advocate for a longer maturity date, typically 24 months. This gives you the maximum amount of time and flexibility. It provides more breathing room to navigate unexpected challenges in product development or a downturn in the fundraising market without the immediate pressure of an expiring note.
Investors May Prefer a Shorter Term: Some investors may push for a shorter term, such as 18 months. A shorter maturity date provides them with an earlier opportunity to check in on the company's progress. It creates more urgency for the founding team and gives the investors more leverage to renegotiate the terms (e.g., by lowering the valuation cap) if the company is not performing as expected.
The Right Answer for Your Startup
For most companies, a 24-month maturity date is a fair and standard starting point for negotiations. It is widely accepted in the market and provides a realistic window for execution. The most important thing is that you and your board have a clear, milestone-driven operating plan that demonstrates how you will use the next two years to create the value necessary to attract a Series A financing well before the maturity date becomes a crisis.
Disclaimer: This post is for general informational purposes only and does not constitute legal, tax, or financial advice. Reading or relying on this content does not create an attorney–client relationship. Every startup’s situation is unique, and you should consult qualified legal or tax professionals before making decisions that may affect your business.