A down round is a funding round in which a company raises capital at a lower per-share price — and therefore a lower valuation — than its previous round. It is the opposite of an "up round" and usually reflects deteriorating fundamentals, a harsher funding market, or an earlier over-valuation.
Why it matters to you
If you bought unlisted shares at the prior, higher round and the company then does a down round, the market value of your holding has fallen — on paper you are underwater. Down rounds can also trigger anti-dilution and liquidation-preference protections that favour institutional investors over ordinary holders like you.
Example: A retail investor bought unlisted shares at a peak ₹500 valuation; a subsequent down round repriced the company at ₹300, cutting their paper value by 40%.