Anti-dilution provisions: Protecting investor value in down rounds

Anti-dilution provisions: Protecting investor value in down rounds

In the fast-paced world of venture capital, company valuations can shift rapidly. When a business raises new capital at a lower valuation than in a previous round, a so-called “down round”, early investors risk seeing their ownership diluted. To mitigate this risk, investors often negotiate for anti-dilution protection as part of their investment terms. What are anti-dilution provisions? Anti-dilution provisions are contractual mechanisms design…