Washout Round
Content
Definition
A washout round is a financing event where existing shareholders, including founders and early investors, experience significant dilution due to the issuance of new shares at a valuation much lower than previous rounds.
Usage and Context
A washout round is a financing event where existing shareholders face significant dilution due to new shares issued at a lower value.
Frequently asked questions
- What is a washout round? A washout round is a financing event where existing shareholders, including founders, face significant dilution due to a low valuation.
- What is a washout in finance? A washout in finance refers to a situation where early investors or founders experience significant dilution due to the issuance of new shares at a low valuation.
- What happens to existing investors in a down round? In a down round, existing investors may see their equity diluted, and their shares may lose value because of the lower company valuation.
Benefits
A washout round significantly dilutes existing shareholders due to new shares issued at a lower value.
Conclusion
A washout round greatly dilutes existing shareholders due to new shares issued at a lower valuation.
