# Down Round

*Startups & Venture Capital — Finicade finance glossary*

A down round raises money at a lower valuation than the previous one, triggering anti-dilution provisions and heavy dilution for founders and employees. It's damaging to morale — underwater options make retention hard — and to signalling. It is also, repeatedly, better than the alternative: companies that refuse a down round to protect a paper valuation frequently run out of money instead.

**Also known as:** downround, flat round, recapitalisation round

**Related terms:** [Anti-Dilution Protection](https://finicade.com/glossary/anti-dilution-protection), [Liquidation Preference](https://finicade.com/glossary/liquidation-preference), [Dilution](https://finicade.com/glossary/dilution), [Bridge Round](https://finicade.com/glossary/bridge-round), [Runway](https://finicade.com/glossary/runway)

Source: https://finicade.com/glossary/down-round