Valuations have reset as the tech-heavy Nasdaq has tumbled. (valerii eidlin/Shutterstock) There have only been a few significant down rounds in 2022, but their pace has been picking up lately, a sign of more discounts to come. Over the last week, a flurry of late-stage companies raised new equity at sharply reduced valuations. Last Tuesday, Oda, a Norwegian grocery delivery company, lost its unicorn status when it raised new funds at a $353 million value. Earlier this week, Snyk said it raised capital at a $7.4 billion valuation, a 12% drop from the $8.5 billion that the cybersecurity specialist received last fall. And then on Tuesday, Dataiku, an AI and analytics platform provider, announced a Series F at a $3.7 billion valuation—a nearly 20% markdown from the $4.6 billion it commanded just over a year ago. Down rounds as a percentage of total rounds raised are still low by historical standards, but investors don’t expect it to stay that way for long. “Thousands of companies have been mispriced over the last couple of years,” said Brian Hirsch, managing partner of Tribeca Venture Partners, who added he expects down rounds to start increasing in Q2 and Q3 of next year. When stock market valuations tumbled earlier this year, VCs pressed their portfolio companies to make their cash reserves last as long as possible. They wanted to avoid a new funding round that was likely to come with a reduced value in this new market environment. Many companies have bridged the gap by cutting costs, or taking on venture debt and structured equity. These financing alternatives come with less favorable terms for founders and early investors, but they can also be used to create an appearance that the company’s value was unchanged or even higher. But as cash reserves dwindle, many companies will eventually exhaust those options. At that point, they will have no choice but to raise new capital, likely in a down round. Since valuations aren’t expected to return to their previous highs for a long time, startups that will raise capital next year are likely to do so at a lower valuation. In its newest funding round, Dataiku, which was founded in Paris in 2013 and is now based in New York, raised a $200 million Series F led by Wellington Management. Investors who have backed the company in previous rounds include Tiger Global, Insight Partners and Battery Ventures.