Down rounds have typically been seen in a negative light, but a
recent
Axios Pro Rata article raises an interesting point. If
everyone raises a down round, does anyone really notice? Do they
still have the same negative implications if they are happening
across the board? With current conditions making down rounds more
of a necessity for many startups, it's time to take a closer
look at the down round and the alternatives.
What is a down round?
Private companies raise money through a series of investments
called rounds. In a perfect world, each round is expected to have
higher pricing as the valuation of the company goes up. Not
everything goes as planned, however, and companies will often
pivot, and investors give them a second chance, at an albeit lower
price.
