Cost estimate 2
Can you imagine a little Asian boy with a blank expression on his face sitting on a mechanical helicopter that shakes when you put quarters in it? No?
While Buzzfeed was one of the hottest venture-backed companies around some time ago, things have changed in the last couple of years. A few weeks ago, the company announced the third round of layoffs since 2017, which will affect 15% of its workforce. This measure came after the 2016 Series G “flat” financing round, after missing 2015 revenue targets.
The flow of negative news may suggest that the company is in deep trouble. But in reality, its top line grew by ~7% in 2017, and in a May 2018 interview, Buzzfeed CEO Jonah Peretti said the company was posting “strong double-digit growth”. Why would a company that performs so well announce several rounds of layoffs?
What are Down Rounds?
Whenever a company raises money, it needs to agree on a pre- and a post-money valuation with its investors. The pre-money valuation is the value of the company at the time of the investment, and it is the starting point of the fundraising process. It gives investors an idea of ownership of the company, of the level of control of the founders, and the incentive alignment between them, their investors and their key employees.
What are Down Rounds?
Whenever a company raises money, it needs to agree on a pre- and a post-money valuation with its investors. The pre-money valuation is the value of the company at the time of the investment, and it is the starting point of the fundraising process. It gives investors an idea of ownership of the company, of the level of control of the founders, and the incentive alignment between them, their investors and their key employees.
