Posted by Kyoko Lin, Davis Polk & Wardwell LLP, on Saturday, February 27, 2016
Editor's Note: Kyoko Lin is a partner in the Corporate Department at Davis Polk & Wardwell LLP. This post is based on a Davis Polk memorandum by Ms. Lin, Byron Rooney, and Brian Sieben.
The recent market turmoil has forced VC firms and other private company investors to examine closely the real possibility of seeking financing at a lower valuation—what is often referred to as a “down round.” More recently, the New York Times observed in January, “The unicorn [1] wars are coming, as the downturn in the market will force these onetime highfliers to seek money at valuations below their earlier billion-dollar-plus levels[.]”
