Data room for a down round.
A down round data room has to be complete and candid: what changed since the last round, the new plan, a cash forecast, anti-dilution calculations for each preferred series, the approvals required, and the effect on employee equity. Investors forgive a lower price far more easily than surprises found in diligence.
Down round room
- 01 Situation memo
- 02 Revised plan
- 03 Cash forecast
- 04 Capitalization
- 05 Anti-dilution calculations
- 06 Terms
- 07 Approvals
How it works for a startup.
A down round prices new shares below the previous round. It triggers anti-dilution protection in most venture preferred stock, usually a broad-based weighted average adjustment that increases the conversion rate of earlier preferred. It can also involve pay-to-play terms, recapitalisation, or a new senior preference for incoming money.
Approvals are complex. Existing preferred holders often have protective provisions that require their consent, and the board must consider its duties to all stockholders, especially where insiders lead the round. Counsel may recommend a rights offering to existing holders or an independent committee to reduce litigation risk.
Employees feel the effect directly. Options may now be underwater, and the company may consider repricing or new grants. The room should include the plan for employee equity, because investors want key people to stay.
Top 10 data rooms for this job.
Our five measures, re-weighted for down round. Places 11 to 17 are listed below the cards.
- Setup speed 21%
- Investor experience 17%
- Access control 27%
- Diligence tools 20%
- Startup pricing 15%
- 1 9.3/10First-rate
- $149 monthly
- 14-day free trial
- 8/12 feature checks
- Investor Q&A
- NDA e-signing
- Dynamic watermarks
- View-only and download control
- SOC 2 (hosting)
- 2 8.3/10Strong pick
- Quote only
- Free trial offered
- 9/12 feature checks
- Investor Q&A
- Dynamic watermarks
- View-only and download control
- Viewer activity log
- SOC 2
- ISO 27001
- GDPR
- 3 8.2/10Strong pick
- Quote only
- Free trial offered
- 7/12 feature checks
- Investor Q&A
- Dynamic watermarks
- View-only and download control
- Viewer activity log
- SOC 2
- ISO 27001
- 4 8.1/10Strong pick
- Quote only
- Demo, no trial
- 10/12 feature checks
- Investor Q&A
- Dynamic watermarks
- View-only and download control
- Viewer activity log
- SOC 2
- ISO 27001
- GDPR
- 5 8.1/10Strong pick
- Quote only
- Free trial offered
- 8/12 feature checks
- Investor Q&A
- Dynamic watermarks
- View-only and download control
- Viewer activity log
- SOC 2
- ISO 27001
- 6 8.0/10Strong pick
- $250 monthly
- Free trial offered
- 8/12 feature checks
- Investor Q&A
- NDA e-signing
- Dynamic watermarks
- View-only and download control
- SOC 2
- 7 7.8/10Strong pick
- Quote only
- Demo, no trial
- 8/12 feature checks
- Investor Q&A
- Dynamic watermarks
- View-only and download control
- Viewer activity log
- SOC 2
- ISO 27001
- GDPR
- 8 7.7/10Good option
- $299 monthly
- Free trial offered
- 7/12 feature checks
- Investor Q&A
- Dynamic watermarks
- View-only and download control
- Viewer activity log
- SOC 2
- 9 7.7/10Good option
- $55 monthly
- Free trial offered
- 9/12 feature checks
- NDA e-signing
- Dynamic watermarks
- View-only and download control
- Viewer activity log
- SOC 2
- ISO 27001
- HIPAA
- 10 7.7/10Good option
- Quote only
- Demo, no trial
- 8/12 feature checks
- Investor Q&A
- Dynamic watermarks
- View-only and download control
- Viewer activity log
- SOC 2
- ISO 27001
Show places 11 to 17
- DealRoom 7.5
- SmartRoom 7.5
- Onehub 7.1
- ShareVault 7.1
- Digify 6.8
- Venue by DFIN 6.6
- DocSend 6.6
Folder index.
A starting structure for this room. Rename folders to fit your company and keep the numbers.
What changed, actions taken, why this price, what the money achieves.
New operating plan, cost reductions, milestones.
Monthly cash with and without the round, downside case.
Current cap table, preference stack, pro forma after the round.
Adjustment for each preferred series under the charter formula.
Term sheet, pay-to-play mechanics, any recapitalisation steps.
Required consents, board minutes, independent committee materials, rights offering documents.
Underwater option analysis, repricing or refresh proposal, new 409A.
Recent statements, material contracts, disputes.
All questions and answers, dated.
Need every file by stage? Use the startup data room checklist.
Must-have features.
| Provider | Viewer activity log | Investor Q&A | View-only and download control | Dynamic watermarks | NDA e-signing |
|---|---|---|---|---|---|
| Ellty | |||||
| iDeals | |||||
| Firmex | |||||
| Datasite | |||||
| Ansarada | |||||
| SecureDocs | |||||
| Drooms | |||||
| CapLinked | |||||
| Citrix ShareFile | |||||
| Intralinks |
- Viewer activity log
- Shows which investor opened which file, for how long and when, and exports the record.
- Investor Q&A
- Funds and buyers ask questions against a file; you assign, answer and publish replies, and the thread stays on record.
- View-only and download control
- Set each file to view only, print or download, and change it later without resending anything.
- Dynamic watermarks
- Stamps the viewer email and the time across every page, so a forwarded screenshot points back to its source.
- NDA e-signing
- Investors sign the NDA or click-through terms before the room opens.
Set up the room in 6 steps.
- 1
Write the situation memo first
One honest page on what happened and what the new plan is. It sets the tone for every other document.
- 2
Run anti-dilution with counsel
Calculate the adjustment for each series using the exact charter formula and show the resulting cap table.
- 3
Map every consent
List which holders and classes must approve and in what order, and track signatures in the room.
- 4
Consider a rights offering
Offering existing holders the chance to participate can reduce claims of unfairness. Keep the offer documents in the room.
- 5
Plan for employees
Get a new 409A, assess underwater options and put the retention plan in front of investors.
- 6
Keep the full record
Export the room, Q&A and access log at closing. A down round is the deal most likely to be questioned later.
Common mistakes.
- Understating the cash position or the reasons for the reset.
- Running anti-dilution math on the wrong formula or forgetting a series.
- Insider-led round with no fairness process, inviting later claims.
- No plan for employees with underwater options.