Roughly 13 per cent of companies that raised venture capital last year were valued less than or the same as they were in earlier funding rounds, up from nine per cent in 2022, according to a report from Torys, a Toronto-based law firm. Lower or stagnant valuations were more common among later-stage companies, with 43 per cent of deals falling into those categories. (The Logic)

Talking point: Torys said it’s just the tip of the iceberg, with the true amount of down rounds being “somewhat masked” by startups avoiding raising money through deals that would lower their value. The drop in valuations coincided with investors successfully negotiating better deal terms to protect themselves from losing money in the future. Investors negotiated senior liquidation preferences—terms that give them priority over other backers if a company exits—in 47 per cent of deals, up from about 30 per cent in 2022. “Investors who were willing to write cheques,” the report reads, “were able to dictate terms to sweeten their deal … at the expense of other investors not willing to do the same.”