Tim Wolters has written a post on anti-dilution clauses from an entrepreneurs point of view. Tim promises to write more on other terms like liquidation preferences, reverse vesting, dividends, class voting rights, “and any other terms that have bitten [him] on the ass before.” Tim is co-founder and CTO of Collective Intellect, a new company that just recently closed a Series A funding. He was previously the co-founder and CTO of Dante Group, a company I funded that was acquired by webMethods. Expect straight talk and some good insights from Tim.
Posted in: Term SheetCOMMENTS (2)
Almost seems like calling anti-dilution protection, protection, is a misnomer. Have you found that in a down round, it is most often waived?
It depends on a lot of factors. However, I'd say that anti-dilution ends up sticking at least 50% of the time. It's definitely a negotiated item in a down round and - if it's a severe down round - can be irrelevant mathematically.
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