A down round in venture capital refers to a financing round in which a company raises capital at a valuation lower than its previous funding round. In a down round, the company's valuation per share decreases, and existing investors may experience dilution as additional shares are issued at a lower price. Down rounds are often indicative of challenges or changes in the company's performance that lead investors to reassess its value. While down rounds can provide necessary capital, they may also signal concerns among investors and impact the perceived valuation and future fundraising prospects for the company.
