What is a down round?

A down round is a financing at a lower valuation than the previous round. It triggers anti-dilution adjustments for protected investors, concentrates dilution on founders and employees, and resets the psychological price of the company.

Down rounds became common after the 2021 valuation peak; taking one cleanly is usually better than layering structure (multiples, participation, ratchets) to defend a headline number, because structure compounds against common shareholders in every future outcome.