Anti-Dilution Provisions: Full Ratchet vs Weighted Average
Written by Harry Prabandham
Curated by Rubric Financial
1 / 5
What Anti-Dilution Provisions Do
- Anti-dilution provisions adjust the conversion price of preferred stock when the company issues new shares at a price lower than the previous round (a 'down round')
- The adjustment gives prior investors more shares than they originally purchased, compensating them for the decrease in the company's valuation
- Anti-dilution is standard in virtually all venture deals; the negotiation is about which formula is used to calculate the adjustment
- The two main types are full ratchet (aggressive, investor-friendly) and weighted average (standard, more balanced)
Related Resources
IPO and Going-Public Readiness
A founder-focused walkthrough of IPO readiness, the S-1, direct listings versus traditional IPOs, and what changes once you are public.
Fundraising & EquityUnderstanding Milestone Tranches in Term Sheets
Why milestone-based funding tranches can kill your company, and how to negotiate terms that protect you if you miss a target by 5%.
Fundraising & EquityHow Long Does Fundraising Take?
Realistic timelines for each funding stage, when to start the process, and how to structure a fundraising sprint that creates competitive dynamics.
About the author
Harry PrabandhamFounder & CEO
Founder and CEO of StartupCFO. MBA from Wharton, MS in Computer Science, and decades of experience building and advising venture-backed startups.
More articles by Harry →Related tools and reading
Do I Need a CFO? Quiz
A 2-minute self-assessment: bookkeeper, fractional CFO, or full-time hire.
InsightBookkeeper vs. Accountant vs. Controller vs. CFO: The Startup Finance Hiring Ladder
Bookkeepers record, accountants certify, controllers control, and CFOs decide. Here is what each role owns, what it costs, and the order venture-backed startups should actually hire them in.
GlossaryCAC (Customer Acquisition Cost)
Fully-loaded cost to acquire one new customer.
InsightFractional vs. Outsourced vs. Virtual vs. Part-Time vs. Interim CFO: What Actually Differs
Four of these five terms describe the same hire with different marketing. One of them describes something genuinely different. Here is how to decode the labels, compare the costs, and pick the right model.
GlossaryAnti-dilution Protection
Mechanism that protects investors from down-round dilution by adjusting their conversion price.
InsightSan Francisco Startup Tax Deadlines and Obligations (2026)
San Francisco moved its business registration deadline, rewrote its gross receipts tax under Prop M, and now exempts most sub $5 million startups from city tax. Here is the full 2026 calendar for SF founders, layered on top of the federal and California dates.
Getting ready to raise?
See the reporting investors expect before diligence starts, and what a clean data room looks like when you walk in.
Want the full sample as a PDF?
No spam, ever. If the download doesn't start, email us.
Or talk it through:
