VCs on how to ‘survive and thrive’ after a down round
Down rounds are increasing, but startups can still thrive with incentives for growth.

Venture capitalists are addressing the growing prevalence of down rounds, situations where companies are financed at lower valuations than before. Nikhil Basu Trivedi shared the success story of a startup that pivoted during COVID at TechCrunch Disrupt 2024, highlighting Table22's growth from a down round to a successful $11 million Series A.
Down rounds have become more common, increasing from 7.6% of all deals in 2021 to 15.7% in early 2024, according to PitchBook. Rising interest rates led to valuation drops, and while stressful for founders, investors like Elliott Robinson emphasize the potential long-term benefits and market re-entry opportunities for committed companies.
Managing company morale poses a significant challenge during down rounds, but strategies such as employee incentives and transparent growth targets can motivate teams. Elliott Robinson shared how creating bonus pools tied to revenue growth could encourage commitment, a tactic that reminded employees of core business solidity. Concerns remain about potentially inflated AI company valuations, mirroring the competitive market landscape.