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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). Brad Feld] says his “strong belief” that “just doing a clean resetting — at whatever the valuation so that everybody is aligned and dealing with reality — is much, much better for a company.”

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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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How to Talk About Valuation When a VC Asks

Both Sides of the Table

I thought I’d write a post about how to talk about valuation at a startup and give you some sense of what might be on the mind of the person considering funding you. What was the post money on your last round (and how much capital have you raised)? VCs hate “down rounds” and many don’t even like “flat rounds.”

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Why Raising Too Much Money Can Harm Your Startup

Both Sides of the Table

How much you raise determines valuation I know it sounds crazy but at the earliest stages of a company your valuation often is determined by how much money you raise. A $15–20 million valuation sounds better than an $8 million valuation, doesn’t it? But people never do. Justin is right. But it’s actually not that silly.

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Cybersecurity startups face market challenges

ReadWriteStart

Startups in the cybersecurity sector are facing a daunting market environment , contending with decreased valuations and increasing pressure to sell while competing for vital funding and collaborations. 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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What is the Right Burn Rate at a Startup Company?

Both Sides of the Table

Valuation. I wanted to call out special attention to valuation in this debate. Simply put – down rounds are very hard to achieve psychologically because insiders fight against them (rightly or wrongly) and outsiders have a mental gap that if your valuation is going down your company is forked up and they often just pass.

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How’s Venture Capital Changing in 2023

VC Cafe

Seed and pre-Seed investment levels and valuations remain healthy, there’s more talent in the market and less competition. 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.