A recapitalization (recap) occurs when a company reorganizes its capital structure, such as through a reverse stock split, to make the company more attractive for new investment. It is like when the Titanic hit an iceberg - the company ("the Recap") has encountered financial problems and needs to restructure to stay afloat. Existing investors will likely see their shares diluted in the recap. The venture capitalists and management get seats in the new "lifeboat" company structure, while other early investors face a choice to invest again or lose their original investment.