Priced Round
A priced round is a financing round where the company’s valuation is explicitly set and equity is issued at a defined price per share.
Allocator relevance: Determines ownership outcomes, liquidation preference stacking, and valuation marks—key inputs for venture performance and risk.
Expanded Definition
Priced rounds establish a formal valuation and create preferred equity terms (preferences, protective provisions). Compared to SAFEs, priced rounds provide clearer ownership and governance but can introduce more complex term structures that affect realized outcomes.
For allocators evaluating venture managers, priced round discipline reflects underwriting rigor, negotiation strength, and risk management.
How It Works in Practice
A lead investor negotiates a term sheet, valuation, and preferred terms. Investors purchase equity at a price per share, and ownership is allocated accordingly.
Decision Authority and Governance
Managers must maintain underwriting standards and avoid overpaying in hot markets. Governance mechanisms should limit valuation chasing and ensure term discipline.
Common Misconceptions
- A higher valuation always means a better company.
- Priced rounds are always better than SAFEs.
- Terms don’t matter if valuation grows.
Key Takeaways
- Valuation and terms jointly determine outcomes.
- Priced rounds create clarity but can stack preferences.
- Discipline matters most in competitive markets.