Anti-Dilution
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Term
Main definition
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A contract clause that protects an investor from a substantial reduction in percentage ownership in a company due to the issuance by the company of additional shares to other investors.
The most commonly used adjustment in venture capital and angel deals provides only partial protection and is called a weighted-average anti-dilution formula. Another kind of adjustment that reduces the conversion price to the lowest price per share at which a company sells shares of stock is called a full-ratchet adjustment.
