anti-dilution provisions

Anti-dilution provisions are clauses in investment agreements that protect investors from the negative effects of future funding rounds at lower valuations. If a company issues new shares at a reduced price, these provisions adjust the existing investors’ ownership or share price, helping maintain their initial investment’s value. Essentially, they act as safeguards to prevent early investors’ stakes from being diluted or devalued if the company’s valuation drops during subsequent funding rounds.