One of the most difficult conversations for any entrepreneur starts with: “We need to raise again, but the business isn’t worth what it was in the last round.”
A down round can feel like a verdict on everything you have built. The valuation is lower, existing shareholders face dilution, and suddenly, a process that once felt like growth can feel like a fight for survival.
But a lower valuation doesn't have to be the end of the story – that’s the lesson from VKTRY’s journey, shared by CEO Steve Wasik at the Summer Investor Capital Expo 2026.
Sometimes, Survival Matters More Than Valuation
When VKTRY was raising capital in 2021, the company was coming off a difficult period. It had raised $2 million the previous year at a valuation close to $20 million. Then COVID disrupted schools and team sports, an important part of VKTRY’s market. Sales dropped, cash became increasingly tight, and the company was close to running out of money.
VKTRY had a choice: hold out for better terms or raise the capital it needed to keep going. They chose the latter.
The company raised through a convertible note with a $15 million valuation cap. By definition, it was a step down from the previous valuation. But it gave the business something more important at that moment: time.
Be Honest About What Changed
When the business is struggling, the instinct can be to defend the previous valuation at all costs.
But investors already know when the numbers have changed. Instead of trying to make the business look perfect, entrepreneurs should be prepared to explain what happened, what they learned, and what they plan to do differently. VKTRY's story wasn't about pretending COVID hadn't affected the business. It was about showing investors that the underlying opportunity was still worth investing in.
Steve told investors that VKTRY needed people who believed in the same opportunity the team believed in. That kind of conviction matters.
A difficult fundraising environment can help business leaders identify investors aligned with the long-term vision.
Use the Capital to Change the Trajectory
A down round should not simply buy you more time to repeat the same strategy. The real question is: What will this capital help you change?
For VKTRY, the answer eventually included several important strategic moves. The company began sourcing components internationally, which helped bring its product price down from $199 to $149. It also brought creative production in-house, allowing the team to move faster in a social-media-driven market.
Then came another important decision: focus. Instead of trying to target every sport, VKTRY concentrated its resources on basketball in 2023, then expanded into different sports in the following years. The lesson is straightforward: capital should create progress, not just postpone problems.
Before raising funds, entrepreneurs should be able to answer “What will be different 12 months from now because we raised this money?” If that answer isn't clear, investors may have a bigger concern than the valuation itself.
Don't Let a Lower Valuation Lower Your Ambition
Perhaps the most important lesson from VKTRY's story is that a down round does not determine the eventual outcome.
Steve described the company as being close to going out of business during the difficult period. Yet VKTRY kept building, adapting, and growing.
By 2024, the company believed it was ready to pursue an exit. The process was later paused when tariffs created uncertainty around costs and profitability, forcing the team to wait and build another year of growth. The eventual deal closed in May 2026.
That journey wasn't a straight line. The company faced difficult fundraising conversations, operational challenges, unexpected setbacks, and moments when it wasn't sure it would make it through. But the lower valuation didn't define the company. It became one chapter in a much bigger story.
The Goal Is to Build, Not Protect a Number
Entrepreneurs care a lot about valuation, and they should. It affects ownership, dilution, employee equity, and how the market perceives the company.
But when circumstances change, protecting an old valuation can sometimes come at the expense of protecting the business itself. VKTRY's experience offers a different perspective: a down round can be a reset, not a defeat.
Be transparent about where the company stands. Find investors who believe in the opportunity. Use the new capital to make meaningful changes. And keep building toward the bigger vision.
*This blog is inspired by Steve Wasik’s keynote at the Summer Investor Capital Expo, "The VKTRY Story: The Journey, the Exit & the Lessons Learned”.