Despite the best efforts of entrepreneurs, past financing deals often impede future company investment. In the case of a down round, new investors demand that the company reset and renegotiate its capital structure because the company’s disappointing performance justifies a valuation lower than the last round’s. What are some common down round structures? What are some of the common considerations that have to be balanced in a down round? How does a pay to play structure work? What are some alternatives to pay to play, including exchange mechanisms? What do term sheets and cap tables look like in down rounds? What other terms do investors often require in down rounds? What are steps boards can take to comply with their fiduciary duties?