I think you mean a big haircut for the later stage investors. Even if Uber has a down round, the earliest investors will probably still have positive returns (at least on paper).

> Even if Uber has a down round, the earliest investors will probably still have positive returns

No, they could be crammed out by later investors' liquidation preferences. Depends on how down the down is.

You are confusing a down round with a small exit event (here and in other places in this thread). Liquidation preferences don't come into effect until a sale of the company - so no one is "crammed out" by them in a down round.

Though these two types of events are obviously correlated (a down round makes a smaller exit more likely) they are not the same and should not be confused. A financing at a valuation that is a billion dollars less than the last round would be a down round, but a sale of the company at that same valuation would still far exceed the liquidation overhang.

Haircut does not imply that they will have negative returns. It could mean that instead of a 50x ROI, they end up with a 5x ROI.