Down Round
A funding round at a lower valuation than the previous one.
A down round dilutes existing shareholders more heavily and can signal trouble, though it is sometimes necessary to keep a company alive. Anti-dilution provisions can further penalise founders. Strong metrics and disciplined raising help avoid them.
Examples
A startup raises at a £3m valuation after a prior £5m round. — Market conditions force a down round despite solid progress.
How it relates to The Startup Foundry
Raising the right amount at the right time helps avoid down rounds. The Foundry’s planning tools support sustainable fundraising.