Crammed Down

We’ve all spent our share of weekends binge-watching Shark Tank. Entrepreneurs enter the Tank with their stupid ideas, thinking they’re definitely going to get financing and a sweet partner, like “Cubes.” Unfortunately for the sharks, their stake in the company can experience something called being “crammed down.”

During a round of financing, it is possible that share prices are lower than they were during previous rounds of financing. Because of this, those investors who got in early, at a price that was possibly too high, own a lower percentage of the company now, and are wishing they would have taken the Kevin route, just saying “you’re dead to me” to begin with.