Happy Halloween! This week, we decided to take a closer look at companies that experienced down rounds in 2023. A down round occurs when a company’s valuation is lower than in a previous funding round.:
- In 2023, approximately 20 campaigns have launched with valuations lower than their prior rounds. These valuation discrepancies ranged from $10,000 to a substantial $298.6 million.
- Eight companies experienced a valuation drop of 25% or less compared to their previous round.
- Another eight companies saw their valuation change by 25-50% between rounds.
- Of the 20 companies with decreased valuations, five had a drop of more than 50%, indicating their current valuation is below half of the previous round’s valuation.
- The average decrease in valuation round-over-round is $33.3 million for startups that raised in 2023.
- The startups with the largest down rounds this year were Miso Robotics, Hawaiian Bros, and Rentberry.
- Miso Robotics raised this year at a $221.3 million valuation, down from $519.9 million in a round that closed in 2022.
- Hawaiian Bros saw a valuation decline of $144 million, while Rentberry raised at a valuation down $50 million from the previous round.
- Down rounds can serve as indicators of various factors, which can vary on a case-by-case basis. Nevertheless, one consistent aspect is that investors in a down round are acquiring shares at a more favorable price compared to the previous round.