Anti-Dilution Protection
Definition
Anti-Dilution Protection: Anti-dilution protection gives investors additional shares if the company raises money at a lower valuation than their investment. The two main types are full ratchet (most aggressive) and weighted average (more common), which calculate how many extra shares investors receive.
Example Usage
“Due to weighted average anti-dilution, our Series A investors got extra shares when we did a down Series B.”
Common Misconceptions
Related Terms
Down Round
A down round is a financing round where the company raises capital at a lower valuation than the previous round. This results in significant dilution...
Dilution
Dilution occurs when a company issues new shares, reducing existing shareholders' ownership percentage. In each funding round, founders and early inve...
Term Sheet
A term sheet is a non-binding document outlining the key terms of a proposed investment, including valuation, investment amount, board composition, li...
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