The impact of the COVID-19 pandemic on the global economy has created instability in many startups and the markets that they serve. In the coming months, this uncertainty could lead to an increase in “down-round” financings—venture capital financings for private companies where the company’s valuation has decreased from its previous financing rounds. Down-round financings raise a number of sensitive legal issues for startups that management, the board of directors and investors should carefully consider.
In this webinar, WilmerHale panelists will provide an overview of the issues, as well as practical steps and suggestions in navigating a down-round financing, including:
- Update on the fundraising environment and current market conditions
- Typical down-round considerations
- Fiduciary duty landscape
- Litigation implications
- Lessons from the recent case law
- Structuring down-rounds and proper process
- Alternatives in structuring “pay-to-play” provisions
- Technical issues in down-round financings
- Alternatives to down-round financings and other practical considerations
By recognizing these issues in advance, startups and their investors can significantly mitigate the legal risks associated with down-round financings.
*CLE credit is not available for those who watch webinar recordings.