Startup down rounds fall to 2020 levels as founders lean on tighter models

Carta’s Q1 2026 data shows down rounds dropping to 11.4% of startup financings and dilution shifting toward founders across every stage for three straight years. But eFinancialModels says fundraising still comes down to one thing: whether a founder can defend the numbers in the model.

Why it matters: - Down rounds are becoming less common, which gives startups more room to raise on better terms. - Even in a friendlier market, investors still want a model that proves valuation, dilution and runway. - For early-stage founders, the raise can hinge on financial discipline as much as market conditions.

What happened: - Carta’s State of Private Markets data for Q1 2026 shows 11.4% of startup financings were priced below the company’s previous round. - That share is back near 2019 and 2020 levels among companies on Carta’s platform. - The 11.4% figure is down from a peak of about 22% in 2023. - Carta also reports that dilution has shifted in founders’ favor across every stage for three years in a row. - eFinancialModels said fundraising still depends on whether founders can defend the numbers in their model.

The details: - eFinancialModels said a fundraising model should show a defensible valuation, the dilution each round costs, runway to the next milestone and a downside case that still works. - The company said investors discount valuation figures they cannot trace, so the model should show the valuation method behind the ask. - Its funding-ready startup financial model lays out five valuation methods so founders can show a range rather than assert one point. - The model should include the cap table, so founders can see what they own after the current round and the next one. - The model should project the income statement, balance sheet and cash flow together, monthly in the first year. - That structure lets a founder identify when cash runs out and which milestone must come first. - The model should include base, upside and downside cases to answer the question of what happens if revenue arrives late. - eFinancialModels’ research on valuation multiples for online businesses shows how method and operating drivers can change the valuation result. - Founders can explore startup financial model templates on eFinancialModels. - The release says the information is not investment, financial or legal advice.

Between the lines: - The fundraising market appears to be healing, but the bargaining advantage is not the same as winning investor trust. - A better market can reduce pressure on pricing, yet it can also make investors more selective about the quality of the model. - The message is that founders may have more leverage on terms, but they still need a model that survives scrutiny in the investment committee room. - eFinancialModels framed the model as the place where price, hiring and growth assumptions flow into valuation, ownership and runway in one workbook.

What’s next: - Founders are likely to keep using scenario-based models to support pricing and dilution discussions. - Investors will continue testing whether a startup can explain its path to the next milestone without relying on optimistic assumptions. - eFinancialModels is positioning its startup financial model templates as a tool for those investor-ready discussions.

The bottom line: - The market is moving back toward founders, but the model still decides whether the round gets done.