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Per Carta, final yr a full 20% of all VC rounds have been down rounds, i.e. priced at lower than the final spherical value.
Whereas this appears excessive to me, one factor is obvious: the “down spherical” like layoffs has turn into normalized in tech.
Valuations can go up and down. Not solely up in start-ups.
Downrounds are nonetheless tougher to boost than you would possibly suppose. Most VCs don’t wish to do them. I’ve by no means led one myself at SaaStr Fund.
But it surely occurs. If you happen to have been value $100m final yr, and now it’s $50m … that’s nonetheless Default Alive. Elevate the capital you want, and push on to an even bigger and brighter day. Stay to battle one other day. Particularly in case you’re nonetheless rising at an honest clip.
A associated submit right here:
Expensive SaaStr: Why Is a “Downround” So Unhealthy?
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