Understanding Price-Based Antidilution Protection: Five Principles to Apply When Negotiating a Down-Round Financing
Robert P. Bartlett III
University of California, Berkeley - School of Law; University of California, Berkeley - Berkeley Center for Law, Business and the Economy
July 12, 2011
The Business Lawyer, Vol. 59, November 2003
This Article provides a practical guide for applying and understanding price-based antidilution protection – one of the principle financial terms negotiated by venture capitalists when making a portfolio company investment. In the process, it highlights some of the often surprising and unintended consequences of standard antidilution formulas in down-round settings, particularly on a company’s new investors. To avoid these results, the Article provides five guiding principles for venture capitalists to apply when negotiating an investment in a company having antidilution protection.
Number of Pages in PDF File: 20
Keywords: Venture Capital, Antidilution Protection, Down Round FinancingAccepted Paper Series
Date posted: July 14, 2011
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