An in-the-middle version of anti dilution is narrow-based weighted average.

By default, you see 1,333,333 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 1,333,333 shares to see the original and anti dilution shares. Now, do the following:

1. Change the pre-money of Series B to $4,000,000 to remove the trigger of the anti dilution
2. Now you see the $1.00/share that would be expected by a flat round.
3. 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

Narrow-based weighted average looks at a pre-determined number of shares, prior to the new round. In this example, we’ll use the number of preferred Series A shares. That is 1,000,000.

(1,000,000 + ($500,000 / $1.00)) / (1,000,000 + ($500,000 / $0.50)) = $0.75/share.

When applied to the original $1,000,000 investment, it yields the 1,333,333 shares.

Other kinds of Anti Dilution

• Broad-based Weighted Average
• Full Ratchet

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