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Down Rounds: Deal With Reality

Feld Thoughts

She has a good article today in TechCrunch titled Embrace the down round (it’s going to be okay, maybe). ” Now, I’m not encouraging anyone to do a down round if unnecessary., ” Now, I’m not encouraging anyone to do a down round if unnecessary.,

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The Damaging Psychology of Down Rounds

Both Sides of the Table

. “Whenever I hear advice about pricing a round too high for the next round, I can’t help but think: well, if the choice (ceteris paribus) is between. I would love it if other people would weigh in on the comments section below if you’ve had experiences with down rounds. A down round.

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Founders – Use Your Down Round To Clean Up Your Cap Table

Feld Thoughts

Then, if you end up doing a down round, it suddenly matters a lot. Don’t worry about this too much, until you do a down round. Then use the down round to clean up your preference overhang. The post Founders – Use Your Down Round To Clean Up Your Cap Table appeared first on Feld Thoughts.

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Cybersecurity startups face market challenges

ReadWriteStart

Consequently, some startups have faced struggles securing investments, resulting in down rounds where their valuations decline between funding rounds. Additionally, these down rounds can decrease employee morale, as they may dilute shares or pay cuts, affecting the overall work environment.

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A heartbreaking story about time and money.

Berkonomics

It is not a strong bargaining position for the CEO to ask for money to complete a product promised for completion with the previous round of funding. And professional investors often penalize the company with lower-priced down rounds or expensive loans as a result.

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How’s Venture Capital Changing in 2023

VC Cafe

The result is mass layoffs (over 119,000 in the US since the beginning of 2023 and it’s only Feb), down rounds (even for Silicon Valley darlings like Stripe) and fund terms that go above the 2/20 standard. Gil Dibner captured that sentiment in a recent Twitter thread: We talk to a fair number of LPs.

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Cram Down – A Test of Character for VCs and Founders

Steve Blank

For the common shareholders (employees, advisors, and previous investors), a cram down is a big middle finger, as it comes with reverse split – meaning your common shares are now worth 1/10th, 1/100th or even 1/1000th of their previous value. (A A cram down is different than a down round.

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