Does a down round meaningfully damage a startup's morale and prospects, or is that damage overstated?

Harry Stebbings · Feb 27, 2023

Down rounds are much rarer than people think and they destroy company morale.

Albert Wenger tweeted he has seen only two down rounds in eighteen years in venture.

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Harry Stebbings · Jan 22, 2024 · hedged

A down round can be fatal to company morale and the internal feeling of progression, and is hard to come back from

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Eric Paley · Sep 20, 2023

IPO inflation during euphoric windows has long-term detrimental, morale-destroying effects on companies, even though those windows are great for selling companies outright

It is very hard to work at a company that went public at $10B and is now worth $1.5B

60:56 Ipo euphoria pricing creates long term morale damage once value craters

Adam Fisher · Jan 22, 2024

Down rounds are not the real problem; valuations that sit in or above exit territory are, and they are very hard to recover from

Such companies face either a recap if they need more money or a sale at a depressed price where late investors just want their money back — neither outcome is pretty

41:34 Down rounds are not the real problem overvaluation into exit territory is

Adam Fisher · Jan 22, 2024 · hedged

The internal damage of a down round is inflated, and a CEO who speaks to employees like adults can get past it

A public company CEO wouldn't understand the concern — their stock moves daily; a private company can simply explain that the market repriced and that raising at the peak avoided dilution

42:19 Internal damage of a down round is inflated clear ceo communication overcomes it