Definition
A toxic funding structure where conversion price drops as stock price falls, creating a downward spiral that destroys equity value. The financial equivalent of quicksand—struggling only makes it worse.
Example Usage
The company took death spiral financing from a sketchy investor as a last resort, and six months later the stock was worthless and founders owned 2%.
Origin
Finance terminology from predatory convertible debt structures, common in distressed public companies
Fun Fact
Death spiral financing is illegal in some jurisdictions and widely condemned, yet desperate companies still accept it, proving that even sophisticated founders make terrible decisions when the alternative is bankruptcy.
Related Terms
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See “death spiral financing” in Corporate Speak, Gen-Z Slang, Pirate Speak, and more.
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