Down Round Impact Calculator
The formula
What the down round tells you
A falling valuation triggers anti-dilution: prior preferred converts cheaper, their stake grows, and the difference comes out of common. This frames the weighted-average case against the full-ratchet bound.
Calculation: Price change = new ÷ prev − 1; full-ratchet bound: prior stake = prevInv ÷ newPost (weighted-average lands milder). Enter your inputs and every substitution is shown below the result.
Reading the result
The founder-point transfer from the reset is often bigger than the new money's own stake — that is what makes down rounds existential.
Rules of thumb: Broad-based weighted average is standard; full ratchet should be refused
Limitations and best practice
Stacked rounds with different formulas and pay-to-play clauses make real waterfalls messier than any one-page estimate; confirm terms line by line.
This calculator gives an estimate based on standard formulas; it is not professional financial, medical, legal or engineering advice. Verify anything you plan to act on with a qualified professional and your own records.
Frequently asked questions
Is a flat round the same as down?
Can founders fight the reset?
Source & methodology
NVCA anti-dilution provisions.
Down Round Impact: the number, the method and the caveats
This page was written for one job: turning your own inputs into a defensible figure, with the working shown. There are plenty of pages about Down Round Impact; almost none of them show the working. This one does: the formula, every input, a fully computed example, and a sensitivity analysis calculated live from this engine’s own defaults.
It helps to separate the mechanics from the interpretation. The mechanics are fixed: Price change = new ÷ prev − 1; full-ratchet bound: prior stake = prevInv ÷ newPost (weighted-average lands milder). Anyone, anywhere, entering the same inputs will get the same -34.8%. The interpretation is where experience counts: whether -34.8% is good, normal or alarming depends on comparisons covered below, and that is the part most articles about Down Round Impact never explain.
In Business & Entrepreneurship the same quantity is often quoted under two or three different conventions. The formula printed above fixes one convention and applies it consistently, which is what makes results from this page comparable with each other.
What makes a calculation page trustworthy is that its copy is derived from its own arithmetic: here round price change = -34.8%, recomputed every time a field changes, and the sensitivity section ranks the inputs that move the result — Previous round post first, at ≈20.8 % of the headline for a ten-percent error either way in that input. Work down the page and by the end you could re-derive the result in a spreadsheet from memory.
The Down Round Impact formula, explained
Here is the complete model this tool runs — Price change = new ÷ prev − 1; full-ratchet bound: prior stake = prevInv ÷ newPost (weighted-average lands milder) — with each input explained below. If a competitor’s page gives you a different answer from the same inputs, this is the text that settles which of you is right.
Previous round post ($) (example value 19,115,207) is a numeric input whose unit is fixed by the label; a wrong unit is a wrong answer wearing a plausible disguise. This input feeds the formula directly; a defensible figure here is worth more than false precision anywhere else.
This round post ($) (example value 12,457,129) is a quantity rather than a category — precision here is cheap and worth having. The example value is there to demonstrate the mechanics, not to describe your situation — overwrite it.
Previous investor money ($) (example value 4,718,682) is a measured number in the unit named by the label; the formula does not convert for you. Replace the example with the figure from your own records — the tool recomputes instantly and the printed steps follow your numbers.
Founder ownership before (%) (example value 56) is a plain measured quantity — the unit shown in the label is the unit the formula expects. Check the convention first: if the source says “6.5 % per year”, type 6.5 and let the formula do the rest.
Down Round Impact with real numbers, step by step
Rather than describe the calculation, here it is end to end — every substitution in order, starting from the inputs above. Starting figures: Previous round post ($), This round post ($), Previous investor money ($), Founder ownership before (%). The computed round price change comes out at -34.8%, which the interpretation band labels “Down round: prior preferred reprices and takes ~6.6 more points (WA estimate)”.
- Price ratio = $12,457,129 ÷ $19,115,207 = 0.65
- Prior stake 24.7% → 31.3% (WA) — full ratchet would reach 37.9%
Prior stake before reset — 24.7 %. If your inputs change, this is usually the first companion figure to move.
Prior stake after WA-style reset — 31.3 %. If your inputs change, this is usually the first companion figure to move.
Full-ratchet bound (worst case) — 37.9 %. Compare it against the main result of -34.8% before drawing conclusions.
Founders after WA reset — 49.4 %. Read next to the headline, this is the figure that shows the shape of the trade-off.
Keep this worked example open while you enter your own figures: matching the shape of the substitution is the fastest way to spot a unit or convention mistake.
Scenario table: Down Round Impact at ±10 % and ±20 % of the key input
Single-point answers invite false confidence, so the same engine was run across a band around the input that matters most here. Each row is a full recalculation of Down Round Impact, not an interpolation.
| Previous round post setting | Round price change |
|---|---|
| 80 % of the example value | -18.5% |
| 90 % of the example value | -27.6% |
| example inputs | -34.8% |
| 110 % of the example value | -40.8% |
| 120 % of the example value | -45.7% |
Across 5 settings of Previous round post, the result spans -45.7% to -18.5%. A decision that only works at one row of this table is a decision waiting for an input to move. Reproduce it in the form above by editing Previous round post alone; the substitution steps will follow your figures exactly.
The levers behind Down Round Impact, ranked by effect
Nobody should have to guess which input matters. The engine was re-run once per field below — ten percent up, ten percent down, everything else frozen — and the results ranked by how far they moved the round price change. It is the fastest honest answer to “what matters most in Down Round Impact?” — and it is specific to these defaults, because sensitivity moves with the starting point.
- Nudge Previous round post by ±10 % and Down Round Impact lands between -40.8% and -27.6% (sensitivity ≈20.8 %)
- This round post: ten percent up gives -28.3%, ten percent down gives -41.3% — ≈18.7 % of the round price change either way
Previous round post is the dominant lever here: ten percent either way moves the result by about 20.8 %, from -40.8% to -27.6%. That is where a careless figure does the most damage, so check it against a source, and treat This round post as the second priority (≈18.7 % per ten percent). The remaining fields can sit at safe defaults without materially changing the answer — knowing which is which is what separates a careful calculation from an anxious one.
Is your Down Round Impact good — reading the result bands
Nobody acts on a bare figure — they act on a figure with a comparison attached. The verdict attached to the default calculation — “Down round: prior preferred reprices and takes ~6.6 more points (WA estimate)” — is one band on a ladder your own figure may sit somewhere else on. Before treating the band as fact, note its width: ten percent either way on Previous round post already spans -40.8% to -27.6%. The practical reading rules: ask what would have to change to move you one band. If the answer is “a small, plausible input difference”, the band itself is not the finding — the uncertainty is.
Where Down Round Impact sits next to similar measures: this tool answers “how much is the Down Round Impact”, while the related calculators answer “what do I do about it”. Reading the result alone tends to over-weight a single snapshot; pairing it with the companion tools above turns the number into a decision.
The errors that quietly break a Down Round Impact figure
Stacked rounds with different formulas and pay-to-play clauses make real waterfalls messier than any one-page estimate; confirm terms line by line. This calculator gives an estimate based on standard formulas; it is not professional financial, medical, legal or engineering advice. Verify anything you plan to act on with a qualified professional and your own records.
Stopping at the first plausible answer. If the result surprises you, the productive question is which input would have to be wrong for the surprise to disappear — then go check that input.
Attention is also misallocated between fields. Having measured this engine, we can say where it belongs: Previous round post first, everything else second.
Another is comparing across contexts: a Down Round Impact computed with one set of conventions should never be lined up against a figure computed with another. Check the inputs behind both before ranking them.
A quick check for any Down Round Impact figure
- Compare the output against one published benchmark or a colleague’s independent estimate.
- Confirm the example values are plausible for your own situation before replacing them.
- Check Previous round post before anything else: it is the measured dominant input, ≈20.8 % of Down Round Impact per ten percent.
- Re-run the calculation with a ±10 % stress on the two most sensitive inputs.
- State, in one sentence, which convention each rate, unit or period in the form is using.
- Repeat the ±10 % test on the inputs that matter and see whether the decision — not just the number — still holds.
How to use the Down Round Impact tool properly
Using a calculator well sounds trivial, but the difference between a decision-grade figure and a throwaway one lives entirely in the routine. The routine for Down Round Impact takes a minute to learn and applies to every input above.
Step 1 — one document, one pass. Open the statement, label or record that holds previous round post ($), this round post ($), previous investor money ($), founder ownership before (%) and transcribe straight into the form. Transcription from a single source removes the mismatch errors that appear when figures are assembled from three different places. A figure nobody can reproduce is a figure nobody will act on twice.
Step 2 — start from the case you can defend. Enter pessimistic-but-honest figures first; the optimistic run is a ceiling, not a plan. A conclusion that holds on conservative inputs holds everywhere. Precision is a promise you make about your data; make sure your inputs can keep it.
Step 3 — play with the inputs on purpose. Ten percent up, ten percent down, one field at a time. Within a few minutes you will know this calculation better than most people who quote its results. Say the answer out loud before you save it; if it sounds wrong, the model did not change, your understanding did.
Step 4 — ask what would have to be true. Take the result you want and work backwards through the inputs until you find the assumption that produces it; then decide honestly whether that assumption is defensible. Say the answer out loud before you save it; if it sounds wrong, the model did not change, your understanding did.
Step 5 — save the story with the figure. A number without its inputs and its date is unusable within a quarter. Record -34.8%, the assumptions behind it, and today’s date; your future self will be auditing a stranger’s arithmetic. Write the figure down before moving on; memory flatters whichever number you saw last.
Who actually uses Down Round Impact — and when
Business & Entrepreneurship arguments end at arithmetic or they do not end. Down Round Impact is the arithmetic: -34.8% on the example inputs, reproducible by anyone who types the same numbers. Most surprises in numbers are surprises about inputs, not about formulas.
The companion outputs — Prior stake before reset and Prior stake after WA-style reset — exist for the second stage of that screen: the headline sizes the prize, while the companions describe the trade-off you are accepting to get it. Say the answer out loud before you save it; if it sounds wrong, the model did not change, your understanding did.
Treat Down Round Impact like a smoke alarm rather than a painting — its value is in being tested periodically, not in being admired once. A calculation you cannot explain to somebody else is a calculation you cannot defend.
The questions that come up most about Down Round Impact
What affects Down Round Impact the most?
Measured on this engine, Previous round post is the dominant lever: moving it ±10 % shifts the round price change across -40.8% to -27.6% — about 20.8 % of the headline, with This round post next at ≈18.7 %. The ranked list in the sensitivity section is computed live, not asserted from a template.
Which matters more: this round post or previous round post?
For Down Round Impact, Previous round post wins the head-to-head (≈20.8 % against ≈18.7 % per ten-percent change). Knowing which input dominates is the difference between careful work and merely slow work.
What is a typical Down Round Impact?
There is no honest universal average for Down Round Impact, but there is a reference point: the defaults on this page produce -34.8% (Down round: prior preferred reprices and takes ~6.6 more points (WA estimate)). Replace the inputs with your own and compare — that comparison is the useful meaning of “typical”.
How do I calculate Down Round Impact by hand?
Use the stated model — Price change = new ÷ prev − 1; full-ratchet bound: prior stake = prevInv ÷ newPost (weighted-average lands milder) — and substitute in the order the tool prints (it starts from Price ratio = $12,457,129 ÷ $19,115,207 = 0.65). On the example inputs the hand route lands on -34.8%, exactly what the calculator shows. A spreadsheet reproduces it in two or three cells; doing it once by hand is what makes the automated answer trustworthy.
What happens to Down Round Impact if previous round post changes by 10 %?
On these inputs a ±10 % change in previous round post takes Down Round Impact to -40.8% against the -34.8% example — around 20.8 % of the headline. The same test on every other field is in the sensitivity section.
Is the Down Round Impact result of -34.8% good or bad?
Neither, on its own — the label “Down round: prior preferred reprices and takes ~6.6 more points (WA estimate)” is the band this figure falls in for the example inputs, and your own inputs will place you elsewhere on the same ladder. Judge the number against your history and your alternatives, and remember that a ten-percent error in Previous round post alone moves it by ≈20.8 %.
How often should I check Down Round Impact?
Whenever an input changes by more than a few percent, and otherwise on the rhythm of your decisions — before a purchase, a review, a renewal. Down Round Impact is a snapshot, not a subscription; stale snapshots are the most common silent error in Business & Entrepreneurship planning.
What affects Down Round Impact the most?
Sensitivity depends on where you start, but the inputs Previous round post ($) and This round post ($) typically move Down Round Impact further than the rest because they enter the formula multiplicatively. If you can only measure two things well, measure those and hold the others at conservative defaults.
Is a flat round the same as down?
Legally no; economically the option repricings it triggers can dilute like one.
Can founders fight the reset?
By shrinking the raise, bridging, or trading valuation for waiver of ratchet — structure usually beats price.
Is my data private on this page?
Yes — computation happens locally in your browser, with no account, no tracking of your inputs and nothing sent to a server. The printed formula is the whole story of what happens to your figures.
What the labels on this page mean
- Prior stake before reset
- 24.7 % in the default Down Round Impact calculation — one of the secondary figures an experienced reader checks before trusting the primary number.
- Prior stake after WA-style reset
- 31.3 % on the example inputs — a companion figure printed beside the headline of Down Round Impact so that no result is read in isolation.
- Full-ratchet bound (worst case)
- 37.9 % for the Down Round Impact worked case; it sits next to the main result because it carries context the headline leaves out.
- Round price change
- The primary output of this tool: -34.8% for the default inputs, computed exactly from Price change = new ÷ prev − 1; full-ratchet bound: prior stake = prevInv ÷ newPost (weighted-average lands milder).
- Worked example
- The calculation written out in full so that nothing on this page has to be taken on trust.
- Verdict band
- A named zone on the range of plausible results; the example inputs land in “Down round: prior preferred reprices and takes ~6.6 more points (WA estimate)”, and your inputs may not.
- Sensitivity (±10 %)
- How far the Down Round Impact moves when a single input is nudged ten percent either way; the ranked list on this page is computed live from this engine.
Where the Down Round Impact model comes from
There is no black box on this page — the engine evaluates Price change = new ÷ prev − 1; full-ratchet bound: prior stake = prevInv ÷ newPost (weighted-average lands milder). Source of record: NVCA anti-dilution provisions. Any other implementation of this model should return the same figure for the same inputs. If one does not, the difference is in its assumptions — which this page prints and that one probably does not.
Nothing here replaces a qualified professional, and nothing here is approximate either — the arithmetic is exact, and the honesty is in the inputs you supply. Nothing is smoothed, weighted or adjusted behind the scenes; where judgement enters, this page says so and names the input responsible.
Next steps after the calculation
Re-run the calculation with your own figures, stress the two most sensitive inputs by ±10 %, and only then act on the result.
The audience here is people who need one trustworthy number before their next decision. Everything you need to defend the result — formula, substitution, sensitivity, source — is printed above, so the only remaining variable is the honesty of your inputs.