Down Round

A round raised at a lower valuation than the previous one. It dilutes existing shareholders more and can trigger anti-dilution protection for earlier investors.

Why it matters

Down rounds are painful, on morale and on the cap table, but they beat running out of cash. Understanding the anti-dilution mechanics beforehand keeps a hard round from becoming a disaster for founders.

For example

A startup that raised at a 100 crore valuation in the boom has to raise its next round at 60 crore, diluting everyone more and triggering the earlier investors' anti-dilution.

Related terms

Up Round Anti-Dilution Provision Dilution

Go deeper

See how founders actually handle this on Raising your first round, part of the Starting Up hub.

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