Contract Glossary
Anti-Dilution
Definition
A clause that protects an investor's ownership percentage from being reduced when a company issues new shares at a lower price. In plain English: it keeps early investors from getting screwed when the company raises money at a lower valuation later.
In Practice
If you invested $100,000 for 10% of a startup, and the company later raises money at a lower valuation, your 10% could shrink dramatically without anti-dilution protection. These clauses are standard in venture capital and angel investor agreements. The two main types, full ratchet and weighted average, differ in how aggressively they protect you.
Common in these contract types
Related contract clauses
Frequently asked questions
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