So-called “down rounds” for late-stage venture capital companies, or when these companies offer additional shares at a lower price than previous financing rounds, increased by more than 50% in 2022 relative to 2021. While only 7% of qualifying “unicorn” company financing rounds were down rounds in 2021, that number grew to 11% in 2022 according to analysis based on the Morningstar PitchBook Global Unicorn Indexes.
While late-stage venture capital companies, or unicorns, in the U.S. saw just 5% of down round financing in 2022, China, India and the UK saw notable increases in down round financing, with levels of 15%, 13% and 24%, respectively.
Among the Morningstar PitchBook Global Unicorn Index constituents who saw the largest step-up in financing in 2022 were Germany-based big data and software-as-a-service companies Celonis and Personio, respectively, and China-based fashion e-commerce platform Shein.
Among the most recent Unicorns experiencing down rounds are Glovo, Cars24 and Gorillas, e-commerce platforms out of Spain, India and Germany, respectively.
Sanjay Arya, Head of Innovation, Morningstar Indexes
"Investors can now keep up with the ever-changing late-stage venture capital market with the Morningstar PitchBook Global Unicorn Indexes. The indexes give investors greater visibility into this asset class, so they have all of the data and information required for investment success."
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