Down Round

See: Anti-Dilution Clause.

You are the founder of whatever.com. You got investors all excited about your vision of whatevers "in every pot." Like FDR's chickens. They invested at $14 a share. But you failed. You missed your revenue and profit targets. You missed your unit volumes projections. You missed pretty much every metric you notionally promised. And now you're running out of money. You need to raise more or you're bankrupt.

So...you do a down round. It's down in value and down in mood. You need to raise $10 million, so you have to dilute yourself (and your previous investors) with a $5 a share round, valuing the company almost 1/3 of where it was valued previously. But you have to. Or you're dead. So you sell two million shares in this down round at five bucks. And hope for better times.