A down round is a funding round raised at a lower valuation than the company's previous round. The lower price per share mechanically dilutes existing shareholders more than a flat or up round would and often triggers anti-dilution protections that adjust earlier preferred shareholders' conversion ratios to compensate for the lower price. Post-2022, down rounds have transitioned from rare and stigmatized to common and increasingly acceptable, but the underlying anti-dilution math still does real damage to founders and the option pool.
The 2025 down-round landscape:
| Period | Down rounds as % of priced rounds | Context |
|---|---|---|
| 2018-2020 | ~5-8% | Pre-ZIRP normalcy; rare stigma |
| 2021 (peak) | ~3-5% | Peak valuations; up rounds dominant |
| 2022 (... |