Anti-Dilution Provision
A clause protecting investors from dilution if the company later raises at a lower valuation.
Anti-dilution rights adjust an investor’s effective price if a down round occurs. “Full ratchet” repricing is aggressive (resetting to the new lower price), while “weighted average” is more founder-friendly and far more common. These terms can significantly increase investor ownership in a down round.
Examples
A weighted-average anti-dilution clause adjusts a seed investor’s shares after a down round. — Founders resist a full-ratchet term.
How it relates to The Startup Foundry
The Foundry’s Learn/Improve content explains protective provisions so founders negotiate fair terms with its network.