Desde Investopedia

TERM OF THE DAY

Down Round A down round occurs in private financing when investors purchase stock or convertible bonds from a company at a lower valuation than the preceding round. Lower valuations in private companies occur for many of the same reasons as publicly traded stocks, including the rise of new competition, stock market declines and changing investor perceptions on company valuations.

Breaking it Down: While each funding round typically results in the dilution of ownership percentages for existing investors, the need to sell a higher number of shares to meet... Read More