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Anti-Dilution Clause
A provision designed to protect an investor's ownership percentage in a company from being diluted by future equity issuances.
Implications
Used in investment agreements to protect investors from dilution of their ownership percentage in subsequent funding rounds.
Example
Example: Early investors in a startup negotiate an anti-dilution clause to maintain their ownership percentage if the company issues new shares at a lower price.
Related Terms
Compared to standard equity terms, anti-dilution clauses specifically protect against the reduction in ownership percentage.
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