Speakers
- Michael Lints, Partner, Golden Gate Ventures
- Matthew Bartus, Partner, Cooley LLP
- Ferish Patel, Partner, Cooley LLP
Video
Audio
Basics of Down Rounds Timestamps
The What and Why of Down Rounds
Understanding a Down Round (05:56) Reasons for a down round (06:50) Normal times VS tough times: What should you do? (11:00) Mechanics of Down Round Financing
Types of down rounds (11:50) - Full-Ratchet (12:35) - Weighted Average (13:00) Managing Expectations Down Round alternatives (18:35) Alternatives to Staff Equity Avoiding a down round (25:45) Preparing for a down round (39:00)
Post Down Round Keep Calm and Carry On (For Founders) (43:40)
Q&A Timestamps
29:40 to 32:00
How common are down rounds? E.g., let’s say 100 companies each raise 10 rounds on average. How many of these rounds are likely to be down rounds?
32:00 to 37:45
What do you say to a majority investor who stonewalls a downround?
What do you say to a majority investor who wants to abuse the downround to dilute the founders?
45:45 to 48:40
Have you seen recent funding rounds led by new investors where they ask for a multiple (eg 3x) of their money as a liquidity preference? How common is this and how do earlier investors feel about this?
48:45 to 51:10
What are some red flags that you look out for that distinguishes a company that is experiencing a 'down round' and one that is in crisis and likely to fail and close up?
51:20 to 54:20
What are the most common deal structures for down roads? Any ideas for ways to make it “win-win”?
56:50 to 1:00:00
What's one of the most memorable case where the startup had a downround but for the future rounds, they were able to bounce back to upround?
How does legalities work in that situation and how could it be get prepared for maximization of economic upside.
Slides