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Angels, Dragons and Vultures: How to Tame Your Investors And Not Lose Your Company by Simon Acland

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UP, DOWN, SHAKE IT ALL AROUND

I apologize for having lapsed into jargon without explaining it first, although in this case you hardly deserve a prize for working out the difference between an up round and a down round. An up round is what everyone wants, when the pre-money valuation of your company in the new round exceeds the post-money valuation of the previous round. On a fully diluted basis, naturally. It is most simply defined by saying that the price per share goes up from one round to the next.

A down round is the opposite. It can be caused by internal or external circumstances. The internal circumstance which usually causes a down round is when progress in the company has been disappointing but not calamitous (because then there would ...

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