This sample form, a Down-Round Term Sheet document, is usable for corporate/business matters. The language is easily adaptable to fit your circumstances. You must confirm compliance with applicable law in your state. Available in Word format.
Not necessarily! While it may feel like a bump in the road, it can lead to new opportunities and a chance to turn things around. Sometimes you have to take a step back to leap forward.
Absolutely. It can make things a bit trickier, like having a cloud over the sun. Investors might worry about profitability or stability after a down round.
It's wise to consult with a legal expert and financial advisor. Getting a second opinion can save you from making a decision you might regret down the line.
Existing investors might feel a pinch since their ownership percentage can get diluted. It’s a bit like being in a boat with holes—everyone has to bail out some water to keep it afloat.
You'll want to look out for details like the new valuation, the investment amount, the rights of new investors, and any changes to the old investors’ shares. It's like reading the fine print in a contract, but crucial.
Sometimes the chips don't fall where you want them. Companies may face challenges or market changes, leading them to raise funds at a lower valuation to keep their heads above water.