Down Rounds Popular, But Dangerous
This article was originally published in Start Up
Executive Summary
As recently as 12-18 months ago, biotechs could call on a wide range of investors: hedge funds, institutional investors, and VCs. But as the IPO market vanished, things changed quickly, and only the VCs remain. Using their market power, these VCs are resetting prices through flat and down-rounds, taking advantage of the financing drought to fund later-stage companies that will theoretically be ready for an IPO should the window open.