Anti-Dilution Protection
Also called: anti-dilution, ratchet, weighted average anti-dilution
Anti-dilution protection adjusts an earlier investor's conversion price if a later round prices lower, shielding them from a down round at everyone else's expense. Broad-based weighted average is the normal, moderate form. A full ratchet reprices their entire holding to the new low price and can transfer devastating amounts of ownership from founders and employees in a single financing.