VC anti-dilution math.

Anti-dilution protection adjusts investor's conversion price downward when company raises at lower valuation (down round). Two methods: Full Ratchet (harshest - new round price applies retroactively) and Weighted Average Broad-Based (industry standard - blends old and new prices). Standard term in VC term sheets.

Example: investor bought at 10/share. Company down-rounds at 5/share. Full Ratchet: investor's conversion price drops to 5 (gets 2x more shares). Weighted Average: conversion price adjusts to ~7.50 (gets ~33% more shares - less harsh on founders). Always negotiate broad-based weighted average - not full ratchet.

Why anti-dilution matters: protects investors from paying premium price during good times, getting same dilution as later cheaper investors. Full ratchet very founder-unfriendly - can wipe out founder equity in significant down round. Weighted average more reasonable. Pay-to-Play provisions: investor must participate in down round to keep anti-dilution rights - prevents free-riding. Always specify broad-based weighted average + pay-to-play in term sheets.

A worked example

Try the defaults: original price per share of 10, original shares held of 100,000, new round price of 5, new shares issued in down round of 200,000. The tool returns 5.00. You can adjust any input and the result updates as you type — no submit button, no reload. That's the real power here: seeing how sensitive the output is to one or two assumptions.

What moves the number most

The result responds to Original Price Per Share, Original Shares Held, New Round Price (Down Round), New Shares Issued in Down Round, and Protection Type (1=Ratchet, 2=Weighted). Not every input has equal weight. Flip one at a time toward extreme values to feel which ones move the needle most for your situation.

The formula behind this

Full Ratchet: conversion price = new round price. Weighted Average: blended formula. Everything the calculator does is shown in the formula box below, so you can check the math against your own spreadsheet if you want.

Why investors run this

Most people's intuition for compounding is wrong — not because the math is hard, but because linear thinking doesn't account for curves. Running numbers through a calculator like this one is the cheapest way to recalibrate that intuition before making an irreversible decision about contribution rate, asset mix, or retirement age.

What this doesn't capture

Steady-rate math ignores real-world volatility. Actual returns are lumpy; sequence-of-returns risk matters most in drawdown; fees and taxes drag on compound growth; and behaviour changes in drawdowns can reduce outcomes below the projection. Treat the number as one scenario, not a forecast.