Diligence & Terms
Anti-Dilution (Full-Ratchet vs Weighted-Average)
Down-round protection that reprices earlier investors' shares
What it is
Anti-dilution provisions protect earlier investors if the company later sells shares at a LOWER price than they paid (a "down round"). They work by retroactively lowering the price at which the earlier investor's preferred shares convert to common, effectively granting them more shares to compensate. There are two flavors that differ in how aggressive that adjustment is.