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Down round

What is a down round?

A down round is a financing round where a company raises capital by selling its shares at a lower price than in the previous funding round, hence, reducing the company's valuation.

Down rounds can happen for a variety of reasons, including poor company performance, a downturn in the market, or a high initial valuation. While they can dilute the ownership and control of existing shareholders, down rounds can provide necessary funding to keep a company afloat. The key is to understand why the down round is happening and make strategic decisions accordingly.

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