Category

Anti-dilution clauses in a shareholders' agreement

Anti-dilution is the set of mechanisms that protect a shareholder when new shares are issued, especially in a lower-valuation round (a down round). This category covers the clauses investors use to preserve their ownership or entry price: weighted-average anti-dilution (broad-based, the norm, or narrow-based, harsher), full ratchet (the most aggressive), pre-emption rights, pro rata rights, most favored nation (MFN), pay-to-play, and founder dilution caps. These clauses look similar on paper but their impact varies enormously: a poorly negotiated full ratchet can cost you several points of the cap table at the next down round. Atlas shows you which are standard, which are aggressive, and what each one really costs at exit.

8 clauses in this category

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