What Is Anti-Dilution Protection, and How Does it Work in a Down Round?
Key takeaways Price protection, not percentage protection: Anti-dilution protection compensates investors when shares are later issued at a lower price. Pre-emption rights, by contrast, let shareholders keep their percentage by investing again. Full ratchet or weighted average: A full ratchet resets the investor’s price to the new, lower price. A weighted average adjustment also takes account of how much money
