Full Ratchet

The harshest form of anti-dilution: if you raise a down round, earlier investors get repriced as if they had paid the new, lower price for all their shares, regardless of how few new shares are issued.

Why it matters

Full ratchet can massively dilute founders in even a small down round. It is investor-friendly and worth resisting in favor of weighted average, which is the market norm.

For example

An investor with full ratchet who paid 10 rupees a share gets repriced to the new 5 rupee down-round price on all their shares, badly diluting the founders.

Related terms

Anti-Dilution Provision Weighted Average Anti-Dilution Down Round

Go deeper

See how founders actually handle this on Raising your first round, part of the Starting Up hub.

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