2024 was the best year ever for...down rounds 😟
Across priced rounds raised by US startups on Carta, 20% of all deals last year were down rounds (where the valuation of the company fell from the prior mark).
So founders, don't worry — it's not just you.
𝗗𝗼𝘄𝗻 𝗥𝗼𝘂𝗻𝗱 𝗗𝗲𝘁𝗮𝗶𝗹𝘀
Down rounds are always more common in bridge/extension financings than in new primary deals, a trend which continued last year.
However 2024 saw a higher share of primary rounds become down rounds than ever before (14.4% across all stages).
Down rounds are more common in late-stage (Series D and beyond) than in early stage (Seed and Series A). But the rates were higher across every stage in 2024.
The boom in down rounds is obviously related to the overvaluation frenzy we all saw in 2021 and early 2022. Which begs the question - are we over the worst of this? I thought we would be as 2023 came to a close but I was quite wrong.
Not every down round involved "cramming down" existing investors - but many did.
Disheartening, no doubt. Down rounds are not a good time. There's a ton of stress on the founder to re-explain the vision after a setback (although clearly the market is dictating a lot of this). It's a moment where clear communication to investors, employees, and believers matters a lot.
And hey, Facebook took a down round once.
Hang in there 🙏
#startups #founders #venturecapital #downround
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