Definition
The most aggressive anti-dilution protection where early investors' conversion price adjusts to match a down round price, regardless of how small the down round is. Financial punishment for daring to need more money.
Example Usage
The seed investors had full ratchet protection, so when we raised Series A at a lower valuation, their ownership percentage doubled while the founders got crushed.
Origin
Engineering term meaning complete mechanical adjustment, adopted by corporate finance
Fun Fact
Full ratchet provisions are so harsh they're considered a red flag—most sophisticated investors prefer weighted-average anti-dilution instead.
Source: Venture capital term sheet structures and corporate finance
Related Terms
Translate This Term
See “full ratchet” in Corporate Speak, Gen-Z Slang, Pirate Speak, and more.
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