Absolutely. Re valuation and constant eye on the value matrix is the name of the game. We can not expect every investment / investee company to grow steadily. It’s all ups and downs. Helping the investee company is a priority. It’s not about how much money I have invested and at what valuation. It’s about creating maximum value over a period of time. Bringing in additional money at lower valuation happens all the time with a end game of raising valuation. It’s not about today …. It’s about the future.

1. Assess Performance Metrics: Analyze the specific areas where the startup is underperforming. Look at revenue, user growth, market share, or any other relevant metrics to understand the extent of the shortfall. 2. Understand the Causes: Identify the reasons behind the underperformance. Is it due to external market conditions, operational issues, or perhaps unrealistic initial projections? Understanding these factors can inform the renegotiation strategy. 3. Reevaluate Financial Projections: Based on current performance, update the financial projections and growth forecasts. 4. Consider Future Potential: Even if current performance is lacking, the startup may have potential for future growth.

If the startup's performance falls short of expectations, it's crucial to reassess the valuation. Renegotiating can be an effective way to align the company's worth with its current standing, while also ensuring a fair deal for both investors and founders. Being open to such adjustments can preserve long-term growth potential and maintain trust in the partnership.

Valuation are visited only when an investment is happening - so, performance issues, like a bad quarter is not an inflection point for a valuation discussion -- unless you are writing down the valuation for your portfolio/LPs or trying to negotiate a secondary sale. If a startup is doing poorly quarter after quarter, but does find an investor to back it up, albeit at a lower valuation, then anti-dilution provisions (also known as ratchets) come into play. Depending on the ratchet provisions agreed upon, the value of the investor's holding remains at, or close to, the value of the original investment. Negotiating a lower valuation, contingent on a sound continuation plan, including a pivot, might just be the best course of action here.