Down Round
A financing round in which the company�s valuation is lower than it was in previous rounds, often leading to the need for anti-dilution provisions in M&A deals.
Implications
A financing event in which a company sells its shares at a lower valuation than in previous rounds, often indicating a decline in the company's perceived value, potentially diluting existing shareholders and impacting investor confidence.
Example
Example: A startup experiences a down round when it raises funds at a $50 million valuation, down from a previous round�s $100 million valuation, reflecting slower-than-expected growth and increased competition.
Related Terms
Different from an up round, where the company's valuation increases between funding rounds, a down round represents a decline in valuation, often leading to challenges in maintaining investor trust.
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