Anti-Dilution Provision
Also called Anti-Dilution
A provision that protects investors if the company later raises at a lower valuation, by adjusting the price at which their preferred shares convert to common, giving them extra shares.
Why it matters
Anti-dilution shifts the pain of a down round onto founders and common holders. The flavor matters enormously: full ratchet is brutal, broad-based weighted average is the fair standard, so this is a term worth fighting on.
For example
An investor who paid 10 rupees a share has a weighted-average clause, so when the next round prices at 6, their conversion price drops and they receive extra shares to soften the hit.
Related terms
Go deeper
See how founders actually handle this on Raising your first round, part of the Starting Up hub.
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