Anti-dilution clauses protect investors against economic dilution when the company raises capital in a later round at a lower valuation (a down round). The two most important variants are \u2018full ratchet\u2019 (the investor\u2019s own entry valuation is adjusted down to the lowest subsequent valuation) and \u2018broad-based weighted average\u2019 (a weighted average that takes account of the shares already outstanding).<\/p>
In DACH venture capital practice, broad-based weighted average is the dominant market standard; full-ratchet clauses are founder-unfriendly and enforceable only in special situations. Anti-dilution protection is closely linked to the topic of liquidation preferences and to cap-table modelling.<\/p>","protected":false},"excerpt":{"rendered":"
Anti-dilution clauses protect investors against economic dilution when the company raises capital in a later round at a lower valuation (a down round). The two most important variants are \u2018full…<\/p>\n","protected":false},"menu_order":0,"template":"","meta":{"footnotes":""},"categories":[],"class_list":["post-9423","b5_glossar","type-b5_glossar","status-publish"],"yoast_head":"\n