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Entrepreneurship & Startups vocabulary · Equity & Valuation

Down round

Meaning in entrepreneurship & startups, with examples

nounAdvanced term

In entrepreneurship & startups, down round means: A funding round in which a company is valued lower than in its previous round, so new shares are sold at a lower price than before.

In Turkish: düşük değerlemeli tur, değer kaybıyla yapılan tur

How it is used

Down rounds usually happen when growth slows or markets fall. They cause extra dilution, can trigger anti-dilution clauses for earlier investors and often hurt team morale. The opposite is an up round; a round at the same valuation is a flat round.

Example sentences

  1. We had to accept a down round after the market crash, at half our previous valuation.

  2. A down round is painful, but it is better than running out of cash.

Common collocations

  • raise a down round
  • avoid a down round
  • up round
  • flat round
  • valuationThe estimated value of a company, agreed between founders and investors in a funding round, which decides how much ownership investors get for their money.
  • dilutionThe fall in an existing owner's percentage of a company when new shares are issued, for example to new investors or for an employee option pool.
  • funding roundA planned period in which a startup raises a set amount of money from one or more investors, usually on the same terms and at the same valuation.
  • liquidation preferenceA term that gives investors the right to get their money back, or a multiple of it, before other shareholders when the company is sold or closed.

More terms: Equity & Valuation

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