Full Ratchet Anti-Dilution
Definition
An anti-dilution mechanism that adjusts the conversion price of preference shares to the price per share in a new lower-priced round, regardless of the size of the new round. Full ratchet anti-dilution produces the maximum possible adjustment in the protected investor's favour and can result in severe dilution for founders and common shareholders even when the down round is small. Full ratchet anti-dilution is considered an aggressive term and is uncommon in competitive funding markets.
Common Misapplication
The most common misapplication is failing to model the full ratchet adjustment before agreeing to it as a term. A small down round that triggers a full ratchet adjustment can transfer a material proportion of founder ownership to preference shareholders, even when the down round amount is modest.
FFI Standard Reference
This term is defined and applied in Book 3, Section 3.5: The Liquidation and Exit Mechanics Standard.
Related Terms
Citable URL
This term may be cited using the following permanent URL.
Full citation format: Founder Financial Infrastructure Standard, Beta v0.5, Glossary: Full Ratchet Anti-Dilution. https://ffistandard.org/glossary/full-ratchet-anti-dilution/. 2026.