Example of an anti-dilution clause
An investor has an anti-dilution clause that adjusts their shares if new shares are issued at a lower price.
- initialShares:
- 1000
- newPrice:
- 5
- adjustedShares:
- 1200
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Fundraising★ Essential⚗ Includes simulator
Anti-dilution
Protection for investors against the dilution of their shares.
Deep dive
Anti-dilution clauses protect investors by adjusting their ownership percentage if new shares are issued at a lower price. They are often included in financing agreements to secure the value of investments. Do not confuse with preemptive rights, which allow purchasing new shares before others.
Key formula
N/A
Real-world examples
Pitfalls to avoid
- Forgetting to include anti-dilution clauses in agreements.
- Misunderstanding the implications of share adjustments.
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