Washout Round
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.
Benefits
A washout round significantly dilutes existing shareholders 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.
Key Takeaway
A washout round greatly dilutes existing shareholders due to new shares issued at a lower valuation.