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 (... |
A lead investor is the firm that anchors a financing round by setting the valuation, writing the largest check, and taking a board seat. The lead can also be an individual, and the role spans valuation plus all core terms at the priced round. Other investors (called "followers") then participate at the terms the lead has negotiated.
In practice, the lead does the structural work of the round. They negotiate the valuation and term sheet with the founders, conduct the deepest diligence, draft (or instruct counsel to draft) the legal documents, coordinate other investors into the round, and usually join the board as a director or observer. Typical lead check sizes scale with stage: roughly $1 million to $3 million of a $4 million...
A bootstrap startup is a company built without outside equity investment, funded by founder savings, early revenue, and reinvested profit. Also called a bootstrapped startup, the term comes from the phrase "pull yourself up by your bootstraps" and refers to the financial self-reliance of the model, which allows the founders to retain full ownership and control of the business.
Bootstrapped companies trade slower growth for full ownership and decision authority, and the path often leads to a [Lifestyle Business] rather than a venture-scale exit. The founders own 100 percent of the equity (no dilution from investors), set their own pace, and pick their own customers and timelines, but they also fund every dollar of growth fr...
Equity crowdfunding is raising small equity investments from many non-accredited investors via SEC-regulated online platforms. Platforms include Wefunder, Republic, StartEngine, NetCapital, and Microventures, enabled by the 2012 JOBS Act and operationalized through Regulation Crowdfunding (Reg CF, effective 2016) and Regulation A+ (Reg A, expanded 2015). It is distinct from reward-based crowdfunding (Kickstarter, Indiegogo) where backers receive products rather than equity, and from donation-based crowdfunding where contributors receive nothing. It is the funding mechanism that lets startups raise from their customer base and the broader public without the wealth-gate restrictions of traditional accredited-investor offer...
A capital call is the mechanism by which a venture fund draws committed capital from its Limited Partners as needed for investments or expenses. Also called a "drawdown," it applies across PE funds, real estate funds, and other private investment vehicles, typically over the first 4-5 years of fund life, with strict legal obligations on LPs to fund each call within the defined window (typically 10-30 days) and serious consequences for failure to fund. It is the operational mechanic that connects LP capital commitments to actual deployed capital, and one of the most important fund-administration concepts to understand.
The mechanic: LPs commit capital at fund formation but don't fund the commitment immediately. Instead, the GP i...
A share buyback is a corporate action in which a company purchases its own shares from existing stockholders, reducing the outstanding share count. Also called share repurchase or stock buyback, the repurchased shares either become treasury stock or are canceled, used at public companies as a capital-return mechanism and at private companies as an employee/investor liquidity mechanism via tender offers. It is the corporate analog of an individual stockholder selling shares, with the company itself as the buyer.
The two main contexts:
Public-company buybacks:
Demo day is the event ending an accelerator program where each startup pitches a large invited audience of investors in 2 to 6 minutes. The audience also includes press, partners, and ecosystem players, and the pitch is designed to drive follow-up meetings and term sheets within the days and weeks after the event. It is the marquee fundraising moment for accelerator cohorts and has become a meaningful slice of the early-stage venture funding rhythm, often serving as the early-stage alternative to a traditional [Roadshow].
The format and major examples: Y Combinator demo day (the canonical version, originated 2005, now hosts the largest invited investor audiences for any accelerator; YC demo days have moved between in-person and rem...
An up round is a funding round raised at a higher valuation than the company's previous round. It signals that the company has grown in value since the last financing and dilutes existing shareholders less per dollar raised than a flat or down round would. Up rounds are the default expectation in a healthy venture trajectory: each round prices the company higher than the last as it hits milestones, grows revenue, and demonstrates the path to the next milestone.
Typical step-up benchmarks (2025):
| Round transition | Healthy step-up | Strong step-up | Suspect step-up |
|---|---|---|---|
| Seed → Series A | 2-3x | 3-5x | >5x (sets very high bar) |
| Series A → Series B | 2-3x | 3-4x | >4x |
| Series B → Series C | 1.5-2.5x | 2.5-3.5x | >3.5x |
| Series C → Series D+ | 1.3-2x | 2-3x | >... |
The Jumpstart Our Business Startups (JOBS) Act is bipartisan US legislation signed into law in April 2012 that liberalized US securities regulations for smaller companies. It had three major impacts on startup fundraising: (1) creating the framework for equity crowdfunding under Regulation CF (operationalized 2016), (2) expanding Regulation A from a rarely-used $5M cap into Reg A+ with a $50M cap (later raised to $75M), and (3) creating the Emerging Growth Company (EGC) category that simplified IPO disclosure requirements for companies under $1.235 billion (2024 threshold) in revenue. It is the most significant securities-law reform affecting startup capital access in decades.
The three major changes:
A crossover investor is an investor that participates in both private late-stage venture rounds and public-market follow-on rounds after companies IPO. The private participation typically covers Series D, E, F or pre-IPO rounds, bridging the traditional divide between private VC and public-market investors and often providing the "crossover" round that signals a company's readiness for IPO. The investor continues to hold and add to positions across the IPO event into the public market. It is the investor category that fills the gap between late-stage venture and traditional mutual funds, and the category that grew dramatically in the 2018-2022 period before contracting in 2022-2024.
The major crossover firms: Tiger Global...