The most friendly version of anti dilution is broad-based weighted average.
By default, you see 1,111,111 shares for VC Firm A for their Series A investment. This was 1,000,000 shares before the anti dilution was triggered. Hover your mouse over the 1,111,111 shares to see the original and anti dilution shares. Now, do the following:
- Change the pre-money of Series B to $4,000,000 to remove the trigger of the anti dilution
- Now you see the $1.00/share that would be expected by a flat round.
- Change the pre-money of Series B back to $2,000,000 to see the anti dilution re-trigger, and read below for a complete description
Broad-based weighted average looks at the total number of shares, prior to the new round.
In this example, that is 4,000,000 (3,000,000 from Founders, 1,000,000 from VC Firm A’s investment).
(4,000,000 + ($500,000 / $1.00)) / (4,000,000 + ($500,000 / $0.50)) = $0.90/share.
When applied to the original $1,000,000 investment, it yields the 1,111,111 shares.
Other kinds of Anti Dilution
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