Per Carta, last year a full 20% of all VC rounds were down rounds, i.e. priced at less than the last round price.
While this seems high to me, one thing is clear: the “down round” — like layoffs — has become normalized in tech.
Valuations can go up and down. They do every day with public companies. Not only up in start-ups.
Downrounds are still harder to raise than you might think. Most VCs don’t want to do them. I’ve never led one myself at SaaStr Fund.
But it happens. If you were worth $100m last year, and now it’s $50m … that’s still Default Alive. Raise the capital you need, and push on to a bigger and brighter day. Live to fight another day. Especially if you’re still growing at a decent clip.
A related post here:
