TLDR:
A flat round is a fundraising round in which the company raises capital at the same valuation as its previous round, indicating stagnation in growth or market conditions.
Why Flat Rounds Happen
Flat rounds typically occur when a company has grown sufficiently to need more capital but hasn’t demonstrated the step-change in metrics that would justify a valuation increase. Common causes include slower-than-expected revenue growth, market conditions that have compressed valuation multiples across the sector, previous round over-valuation that must be corrected, or a competitive landscape change that raises growth concerns. For founders, a flat round is psychologically difficult but often preferable to a down round, as it preserves anti-dilution protection and maintains employee morale.