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🌍 US & Europe · Cap table & fundingFull ratchet
Also called: full-ratchet anti-dilution
In one line
The harshest form of anti-dilution, repricing an investor's earlier shares as if they'd paid the new, lower price.
In plain English
Full ratchet fully resets an investor's price to the down-round price, no matter how few new shares were issued. It's very punishing to common holders and now relatively rare.
If you were explaining it to a 5-year-old
The early friend's rule is extreme: if prices drop at all, they get repriced as if they'd paid today's low price for everything — grabbing lots of extra toys.
Why it matters when you sell
Full ratchet can massively dilute employees in a down round, slashing the value of your common shares.
Related terms
Put it to use
When you're ready to go deeper, there's an optional Equity Toolkit and Report.
Sources
A general market-practice term. See how we define and source the glossary in our methodology. General information, not advice.
Educational information only — not financial, tax or legal advice, and not an offer to buy or sell any security. Definitions are general; your own documents and local law govern your situation. PrivateTechShares is independent and not a broker or marketplace.