It appears things are not going well for startups these days.
Down rounds, or a funding round in which a startup raises capital at a lower valuation than its last investment, have become more common than the venture community has seen in nearly half a decade. According to data from Carta, down rounds nearly quadrupled in number in Q1 2023 compared to a year earlier.
Down rounds are bad because they can lead to outsized dilution, unhappy investors, employees fretting over the value of their equity, and other less than winsome events. They are new to many startups and were quite rare during the most recent venture boom, when so many startups were raising multiple up rounds in the same year that it became a mini-trend.
The Exchan...
