News

Term Sheet Terms: anti-dilution clauses

These provisions are commonly required by sophisticated investors to protect themselves in the case of a down round. A down round occurs when new money comes in at a lower pre-money valuation (or price per share) than the previous round post-money valuation. For example, if you close an angel round of $1M and agree upon a pre-money valuation of $4M, the post-money valuation will be $5M (pre-money valuation + money in). This means the investors will have purchased 20% of the company.

Full Story: http://timwolters.blogspot.com/2006/01/term-sheet-terms-anti-dilution-clauses.html

News Catrgory Sponspor:


Dorsey & Whitney - An International business law firm, applying a business perspective to clients' needs in Missoula, Montana and beyond.

Leave a Comment

You must be logged in to post a comment.