VC Cafe

OCTOBER 31, 2022

Many companies are now having to resort to tough measures in order to stay afloat, including layoffs, down rounds and tough terms from current investors. If the answer is yes, then a down round is likely the best path forward. Why you shouldn’t worry about raising a down round ( source ).

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Founder Technical Review Down Round Liquidation Preference 173

Startup Professionals Musings

MAY 20, 2016

With the advent and growth of crowdfunding over the past few years, many entrepreneurs have predicted the demise of those demanding angel investment groups and venture capital organizations. Your options for funding just increased, or at least you have a new way to get some real market feedback on the demand for your solution.

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Angel Groups Accredited Investor Equity Due Diligence 136

Both Sides of the Table

MAY 30, 2018

Of course valuation is in the eye of the beholder but if that VC thinks your last round valuation was way too high then he or she is more likely to politely pass rather than try and talk down your valuation now. VCs hate “down rounds” and many don’t even like “flat rounds.” There are some simple reasons.

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Valuation Post-Money Valuation Pre-Money Valuation Cofounder 324

Berkonomics

MARCH 5, 2020

If there are high barriers to entry with such protections as patents, long development time already spent or contracts with the major potential customers, then the risk of a competitor with more resources jumping into the frothy pool and taking advantage of the demand created by the company is minimized. And fifth: Competitive risk. .

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Valuation Down Round Early Stage Demand 62

NZ Entrepreneur

SEPTEMBER 16, 2020

To identify sensitivities here, you need to comprehensively challenge your assumptions about demand, sales cycles, etc. If a startup expects $1M in sales revenue but only gets $100k and they haven’t got a backup plan, they may face a down round or in the worst case liquidity concerns. What is the plan to respond to this?

Startup 69

Startup Sales Cycle Down Round Revenue 69

ithacaVC

NOVEMBER 14, 2014

Raising momentum / high demand. If your company is in high demand, it drives the potential valuation up. Hopefully, it’s in high demand for good reasons, otherwise you risk a down round in the future. The latter won’t be enough money to grow and without the capital to grow, could risk failing or a down round.

Valuation 69

Valuation Startup Down Round Early Stage 69

Berkonomics

MARCH 14, 2019

If there are high barriers to entry with such protections as patents, long development time already spent or contracts with the major potential customers, then the risk of a competitor with more resources jumping into the frothy pool and taking advantage of the demand created by the company is minimized. And fifth: Competitive risk. .

Valuation 48

Valuation Down Round Early Stage Demand 48

Berkonomics

MARCH 15, 2012

If there are high barriers to entry with such protections as patents, long development time already spent or contracts with the major potential customers, then the risk of a competitor with more resources jumping into the frothy pool and taking advantage of the demand created by the company is minimized. And fifth: Competitive risk.

Valuation 80

Valuation Down Round Demand Management 80

Startup Company Lawyer

MARCH 14, 2010

Given that the Series Seed is issued at a fairly low valuation, anti-dilution protection is probably not that important, as a “down round&# from a low valuation in the Series Seed is unlikely. The only way that the Series Seed documents will be widely used is if investors demand use of the documents. Investor pressure.

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Steve Blank

NOVEMBER 2, 2009

In times when venture capital is hard to get, investors extract high costs for failure (down-rounds, cram downs , new management teams, shut down the company.) Marketing demand creation programs (Search Engine Marketing, Public Relations, Advertising, Lead Generation, Trade Shows, etc.)

Lean 244

Lean Silicon Valley Startup RSS 244

Both Sides of the Table

FEBRUARY 14, 2016

The Laws of Supply & Demand. The most basic chart of microeconomics is a supply & demand curve. Demand represents a buyer and supply a seller. Some products are “inelastic” meaning when prices go up demand doesn’t fall much (think cigarettes, alcohol or even illicit drugs). Down rounds are hard.

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Valuation Down Round Startup Later Stage 150

VC Cafe

JANUARY 2, 2023

While 7,838 tech jobs were lost across 120 companies in 2022, according to an analysis by Tech12 , the demand for engineers remained high with 13,100 open engineering roles. Down rounds, especially for growth stage companies, and bridge rounds galore. We started to see down rounds taking place especially in growth stage.

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Valuation Down Round Venture Capital 158

abovethecrowd.com

APRIL 20, 2016

Also, they have a strong belief that any sign of weakness (such as a down round) will have a catastrophic impact on their culture, hiring process, and ability to retain employees. Their own ego is also a factor – will a down round signal weakness? A down round is nothing. Get over it and move on.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

www.paulgraham.com

APRIL 28, 2010

A lawyer I asked about it said: When the company goes public, the SEC will carefully study all prior issuances of stock by the company and demand that it take immediate action to cure any past violations of securities laws. Down rounds are bad news; it is generally the common stockholders who take the hit.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

www.quora.com

SEPTEMBER 22, 2011

1 vote by Elad Gil It's a risk/reward, supply/demand power equilibrium. Even if your company succeeds, there is absolutely no guarantee your equity will not be wiped out in a down round. Update Link to Questions, Topics and People Add Find Questions, Topics or People Comment Joshua Seims , ?_? I'm always su.

Equity 40

Equity Employee Founder Cofounder 40