Subject category:
Entrepreneurship
Published by:
Harvard Business Publishing
Version: 9 September 2004
Length: 3 pages
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https://casecent.re/p/39065
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Abstract
Antidilution provisions are an important element of most financings offered to entrepreneurs by venture capitalists and business angels. Yet, few entrepreneurs are familiar with the different types of antidilution provisions and their mechanics. Compares the three most common scenarios for a financing round: no antidilution protection, weighted average antidilution protection, and full-ratchet antidilution protection. Discusses the nature of antidilution provisions and provides a numerical example. The teaching purpose is to learn about the nature of different types of antidilution provisions often used in venture capital financings. To provide students with tools to analyze alternative types of antidilution provisions.
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Abstract
Antidilution provisions are an important element of most financings offered to entrepreneurs by venture capitalists and business angels. Yet, few entrepreneurs are familiar with the different types of antidilution provisions and their mechanics. Compares the three most common scenarios for a financing round: no antidilution protection, weighted average antidilution protection, and full-ratchet antidilution protection. Discusses the nature of antidilution provisions and provides a numerical example. The teaching purpose is to learn about the nature of different types of antidilution provisions often used in venture capital financings. To provide students with tools to analyze alternative types of antidilution provisions.