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INSIGHT: Important Matters to Consider When Facing a Possible Down Round Financing
The financial press has been reporting that investors are concerned that the United States economy may be heading toward a recession. In light of this and other factors creating uncertainty in the financial markets, investors are questioning the valuations that companies achieved during the heady times of 2020 and 2021, and are indicating that if a company needs to raise funds, they may need to consider a “down round” financing. A down round financing is when a company’s valuation is lower and its shares are sold at a lower price per share than the company’s most recent financing round.
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