Down round

Raising at a lower valuation than your previous round.

Example

Raising at $12M post after a previous $20M post.

Important

Painful and survivable. Anti-dilution provisions can make it much worse for founders, which is one reason not to over-optimise valuation early.

Related terms

• Valuation — The agreed price of the whole company, used to work out what percentage an investment buys.
• Dilution — When new shares are issued, existing shareholders own a smaller percentage of the company than before.
• Anti-dilution — A provision protecting earlier investors if a later round is priced lower, by adjusting their conversion price.

Lessons that explain it

• Valuation, pre-money and post-money — The most confused pair of words in fundraising, and the arithmetic that decides what you own afterwards. (12 min)

All 176 terms in the Founder glossary