Business Pitch Dictionary by pitch.dog
Term-sheet economics · Working

Full-ratchet anti-dilution

Also called: full ratchet

ELI5

A small cheap issuance can reset the investor's price fully.

Used in conversation

“Full-ratchet anti-dilution can be severely dilutive.”

Definition

An anti-dilution mechanism resetting the conversion price to the lowest new issuance price, largely regardless of amount issued.

Here “Full-ratchet anti-dilution” means: An anti-dilution mechanism resetting the conversion price to the lowest new issuance price, largely regardless of amount issued.

Pitch context

You will see “Full-ratchet anti-dilution” in fundraising decks, data rooms, term sheets and investor conversations when the discussion reaches term-sheet economics.

Why it matters: In term-sheet economics, a loose definition can change rights, obligations, approval, disclosure or enforceability.

Caution

Meaning, enforceability and required process vary by jurisdiction and agreement; this definition is not legal advice.

Sources & evidence · 5

Direct term-level sources and supporting source families.