Antidilution, Who Absorbs a Down Round

Calculates how a down round resets the preferred’s conversion under full-ratchet versus broad-based weighted-average antidilution, and what each protection does to founder ownership. Inputs are the Series A share count and original price, the down-round price, founder shares, and the new shares issued.

Interactive Tool

Series A shares

Original price / share

Down-round price / share

Founder shares

New shares in down round

No protection

72.7%

founder ownership

Broad WA

72.1%

market standard

Full ratchet

61.5%

harshest for founders

Full-ratchet Series A shares

4.00M

$10.0M ÷ down price

Broad-WA conversion price

$4.77

falls only modestly

Full ratchet resets the earlier investor's conversion price to the new low price regardless of round size, doubling their shares here. Broad-based weighted average scales the adjustment to the size of the down round, and is the market standard.

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This calculator comes from the free Entrepreneurial Finance course, where the concept is taught with readings, worked examples, and practice questions.

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Built by Devon Coombs, CPA, MBA, Teaching Professor of Finance at Santa Clara University.