Down Rounds and Recaps Part 2: Managing Your Key Stakeholders

Welcome to part two of our series on down rounds and recaps:

• Part 1: An Intro to Down Rounds and Recaps
• Part 2: Managing Your Key Stakeholders <- You are here
• Part 3: A Deep Dive Into Down Rounds
• Part 4: Navigating the Startup Recap

Down rounds and recaps are not just a math problem. They are a people problem.

The process of executing a down round or recap requires the careful balancing of the needs and expectations of three groups of stakeholders.

• Your investors: In between successful exits, your investors need the markups in their portfolios from subsequent funding rounds at higher valuations. These markups increase their fund's internal rate of return, which keeps their LPs happy and supports raising their next fund.
• Your employees: They want to know that their stock options are becoming more valuable. It's the justification they need to accept below-market pay and above-market hours. It keeps them from jumping to other startups in search of the big win.
• You and your co-founders: You're fighting to continue your startup journey. You still believe in your vision. You believe you can overcome your recent setbacks and realize the value you set out to build so long ago.

Before we dive into the execution of down rounds and recaps, we need to focus on managing these stakeholders throughout this process.

???Read the full article at StartupRoadmap.com. Link in the comments.