Anti-Dilution Clause

Definition

A protective mechanism for investors that actually dilutes founders more if the company gets a down round; the cruel irony of startup investing.

Example Usage

The anti-dilution clause in our Series A means the investors are actually worth more in a down round than they were before.

Origin

Standard venture capital legal protection

Fun Fact

Broad-based anti-dilution is more founder-friendly than narrow-based

Source: Investment terms and conditions

Related Terms

Beginner

angel

A wealthy individual who invests their own money in early-stage startups, typically because they're either bored with normal investments or enjoy the thrill of watching their cash evaporate in creative ways. These financial guardian spirits usually write checks between $25K and $100K in exchange for equity, mentorship duties they may or may not fulfill, and the right to say 'I invested in that' at cocktail parties. They're called angels because founders pray for them, not because they're particularly heavenly.

🚀 Startup / VC

Advanced

note tsunami

The overwhelming wave of convertible notes and SAFEs that convert to equity during a priced round, often revealing a far more complex cap table than founders realized. The moment when chickens come home to roost, except the chickens are financial instruments.

🚀 Startup / VC

Intermediate

Product-Market Fit

The mythical moment when your product perfectly matches what customers want, described by VCs as essential but defined by no one in any useful way. It's like obscenity -- you know it when you see it, and most startups never see it.

🚀 Startup / VC

Advanced

mezzanine financing

Late-stage debt or hybrid securities used to bridge the gap between venture rounds and an exit. It's called mezzanine because it sits between the ground floor (equity) and penthouse (IPO).

🚀 Startup / VC

Beginner

Bootstrapping

Building a company using nothing but your own savings, credit cards, and an alarming tolerance for ramen noodles. It's the startup equivalent of performing surgery on yourself -- theoretically possible, but everyone watching is deeply uncomfortable.

🚀 Startup / VC

Intermediate

trademark velocity

The speed at which a startup moves from inception to market dominance within its category. The term is sometimes used when discussing execution speed and competitive moats simultaneously.

🚀 Startup / VC

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