What is Weighted Average Anti-Dilution?
Weighted Average Anti-Dilution
Weighted Average Anti-Dilution is a common investor protection clause that adjusts conversion prices during down rounds based on both the lower share price and the volume of new shares issued.
Why It Matters for Startups
Directly dictates the cap table and dilution structure during fundraising; understanding Weighted Average Anti-Dilution helps founders model equity distributions when structuring rounds for anti-dilution modeling and standard investor contract drafting.
Detailed Deep Dive
Weighted Average Anti-Dilution provides a balanced protection mechanism. Unlike the severe full ratchet, the weighted average conversion price adjustment is moderated by the scale of the down round, protecting investors from loss without completely wiping out founder equity.
Frequently Asked Questions
Q:What are the two common types of weighted average anti-dilution?
Broad-Based (which factors in the entire outstanding capital stock) and Narrow-Based (which only counts outstanding preferred stock).
Q:Which type of weighted average is more founder-friendly?
Broad-Based Weighted Average is more founder-friendly because it dilutes the adjustment impact across a larger pool of shares.
Quick Facts
- CategoryLegal
- Key ApplicationAnti-dilution modeling and standard investor contract drafting
Coverage Trend12 Weeks
Related Startup Terms
Cite This Term
Reference this definition in your articles, research, or documentation to credit this source:
Weighted Average Anti-Dilution Media Coverage & Intelligence
No Direct Weighted Average Anti-Dilution News Today
We currently have no direct coverage articles matching "Weighted Average Anti-Dilution". Explore trending global startup topics below instead.
Trending Startup Stories
Grok 4.7 is now available on Amazon Bedrock
xAI's Grok 4.7 is now available on Amazon Bedrock: a frontier model for coding, long-running agents, and knowledge work. It offers a 500K token context...
Introducing dots
Dots by OpenAI are a proactive assistant that can keep working across complex projects and everyday tasks. Learn how dots help you stay in control while work...
Prompt engineering fundamentals for Amazon Quick
Prompt engineering in Amazon Quick shapes how accurately its AI-powered feature respond to your requests. Part 1 of a two-part series covers the...
Prompt engineering by Quick component: Patterns and pitfalls
Part 2 of our Amazon Quick prompt engineering series goes component by component. Learn the prompt patterns that get the best results from Amazon Quick...