What is a flat round?
A flat round is a financing round in which a startup raises capital at a pre-money valuation equal to or essentially the same as its previous round. Flat rounds avoid the negative signalling of a down round but indicate that the company has not grown into a higher valuation despite the time elapsed.
Flat rounds are commonly used as bridges during market downturns, before a critical milestone, or after a difficult quarter. They preserve cap-table cleanliness for the next priced round but should be accompanied by clear narrative explaining the company’s growth thesis.