Distinct from ordinary cap table dilution — full-ratchet anti-dilution is a specific protective provision that resets an earlier investor’s conversion price entirely if a later “down round” prices shares lower.
How it works
If the new round’s price is below the original price, the conversion price resets to the new, lower price. Dividing the original dollar investment by that new price gives the adjusted share count — the difference from the original shares is the extra shares issued.
What this does not include
This models full-ratchet protection specifically — a more common (and less punitive to the company) alternative called “weighted average” anti-dilution uses a different, more moderate formula not computed here.
How to use this calculator
- Enter original shares purchased, original price per share, and the new (down) round price.
Frequently asked questions
Why is full-ratchet considered harsh on founders and other shareholders?
It fully resets the protected investor’s price regardless of how many new shares were actually issued in the down round, potentially causing significant additional dilution to everyone else on the cap table.
How common is full-ratchet anti-dilution in venture deals?
Less common than weighted-average anti-dilution in typical venture financings — full-ratchet is generally considered more investor-favorable and less standard in negotiated term sheets.
Does full-ratchet protection trigger on an up round?
No — it only triggers when the new round’s price is below the investor’s original price; an up round (higher price) doesn’t trigger any adjustment.
