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Down Round Valuation: How to Survive and Protect Your Equity (2025)

Equidam

From 2008 until 2022, most central banks lowered interest rates to 1% or below, creating what economists call the Zero Interest Rate Policy (ZIRP). When the Federal Reserve began raising rates in March 2022, the music stopped abruptly. The 2008 financial crisis saw 36% down rounds.

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Startup Valuation: The Ultimate Guide

Equidam

10] , [23] , [2] Discount Rate: The rate used to discount future cash flows is typically the cost of equity, calculated via the Capital Asset Pricing Model (CAPM): Cost of Equity = Risk-Free Rate + Beta * Market Risk Premium. [23] 23] Risk-Free Rate: Tied to government bond yields (e.g.,