Deal Terms
Weighted Average Anti-Dilution
The most common form of anti-dilution protection, adjusting an investor's conversion price based on both the new lower price and the number of shares issued.
Weighted average anti-dilution is the standard form of anti-dilution protection in VC deals. When a company raises a down round, weighted average anti-dilution adjusts the conversion price of existing preferred stock based on: how many shares were sold at the lower price AND what that lower price is. The formula weighs the impact, meaning a small down round with few shares issued has a modest adjustment, while a large down round with many shares issued has a bigger adjustment. Broad-based weighted average (BWAM) includes all outstanding shares in the calculation — the most founder-friendly variant. Narrow-based weighted average includes only preferred shares, making the adjustment more aggressive. Both are more founder-friendly than full ratchet (which resets the conversion price to the new low price regardless of volume).