Down Round

A funding round in which a startup raises money at a lower valuation than its previous round.

A down round signals that investors now value a company less than they did in an earlier financing, often diluting existing shareholders more heavily to compensate new investors for the added risk. It can hurt morale and signal trouble, but it can also simply reflect how markets reprice startups during a broader downturn.

The company was forced into a down round after growth slowed, cutting its valuation nearly in half.