What is a down round?

A down round is a funding round priced below the company's previous round. According to Carta, the US equity management platform, the down-round rate fell to 11.4% of new investments in the first quarter of 2026. Cooley counted the same share in its own reported financings that quarter.

A down round is a new funding round in which shares are issued at a lower price than in the company's previous round, so the company is valued below what it was worth at its last raise.

The word describes a price, not a judgement. A company can raise a down round because the market repriced its whole sector, because the previous round was priced optimistically, or because it needs money before it has reached the milestone the last round was raised against.

How common is a down round now?

Less common than it was. According to Carta, the US equity management platform, the down-round rate fell to 11.4% of new investments in the first quarter of 2026, which it describes as back in line with the levels it recorded in 2019 and 2020. Cooley, reporting separately on the venture financings it handled, counted 11.4% down rounds, 2.6% flat rounds and 86% up rounds in the same quarter.

Two independent counts landing on the same share is unusual and worth noting, but both samples are made up of the deals that closed. Companies that could not raise at any price are in neither.

Sources:
Carta (US), State of Private Markets: Q1 2026
Cooley, Q1 2026 Venture Financing Report

What a down round changes

More than the valuation. Existing shareholders are diluted harder for the same amount of money, anti-dilution clauses in earlier agreements can adjust the number of shares earlier investors hold, and employee options granted at the old price sit above the new one until the company grows past it again.

Where the new price sits relative to the old one is set in the term sheet, and the clauses that react to it are in how European and US term sheets differ. Raising between priced rounds without setting a new valuation at all is the subject of what a bridge round is.

Sources

1. Carta (US), State of Private Markets: Q1 2026, checked 22 September 2026
2. Cooley, Q1 2026 Venture Financing Report, checked 22 September 2026

Checked on 22 September 2026. This page is general information, not legal, tax or investment advice. Rules change: check the official source, or ask an adviser, before you act on it.