--- title: "Anti-Dilution Protection, Definition | MedTech Terms" description: "Adjustment that protects investors if the company raises a future round at a lower price. Plain-English Investment & Finance definition for MedTech teams, with" lang: en json-ld: | { "@context": "https://schema.org", "@graph": [ { "@type": "DefinedTerm", "@id": "https://medtechterms.com/terms/anti-dilution#term", "name": "Anti-Dilution Protection", "description": "Anti-dilution provisions adjust the conversion price of preferred stock if the company issues new shares at a lower price than a prior round (a 'down round'). The most common formula is 'broad-based weighted-average,' which partially compensates earlier investors. 'Full ratchet' fully repriced and is investor-friendly but rare.", "url": "https://medtechterms.com/terms/anti-dilution", "termCode": "anti-dilution", "inDefinedTermSet": { "@type": "DefinedTermSet", "name": "MedTech Terms", "url": "https://medtechterms.com/terms" } }, { "@type": "Article", "@id": "https://medtechterms.com/terms/anti-dilution#article", "headline": "Anti-Dilution Protection", "description": "Adjustment that protects investors if the company raises a future round at a lower price.", "url": "https://medtechterms.com/terms/anti-dilution", "mainEntityOfPage": { "@type": "WebPage", "@id": "https://medtechterms.com/terms/anti-dilution" }, "about": { "@id": "https://medtechterms.com/terms/anti-dilution#term" }, "articleSection": "Investment & Finance", "inLanguage": "en", "keywords": "Anti-Dilution Protection, Investment & Finance, medical device, MedTech", "author": { "@type": "Person", "name": "Christian Espinosa", "jobTitle": "Founder, Blue Goat Cyber", "url": "https://bluegoatcyber.com" }, "publisher": { "@type": "Organization", "name": "MedTech Terms", "url": "https://medtechterms.com" }, "isPartOf": { "@type": "WebSite", "name": "MedTech Terms", "url": "https://medtechterms.com" }, "datePublished": "2026-05-05", "dateModified": "2026-05-05", "citation": [ { "@type": "CreativeWork", "name": "Cooley GO: anti-dilution", "url": "https://www.cooleygo.com/", "publisher": { "@type": "Organization", "name": "Cooley GO" } }, { "@type": "CreativeWork", "name": "NVCA Model Documents", "url": "https://nvca.org/model-legal-documents/", "publisher": { "@type": "Organization", "name": "NVCA" } }, { "@type": "CreativeWork", "name": "Silicon Valley Bank - Healthcare Reports", "url": "https://www.svb.com/trends-insights/", "publisher": { "@type": "Organization", "name": "SVB" } } ], "mentions": [ { "@type": "DefinedTerm", "@id": "https://medtechterms.com/terms/dilution#term", "name": "Dilution", "url": "https://medtechterms.com/terms/dilution" }, { "@type": "DefinedTerm", "@id": "https://medtechterms.com/terms/term-sheet#term", "name": "Term Sheet", "url": "https://medtechterms.com/terms/term-sheet" }, { "@type": "DefinedTerm", "@id": "https://medtechterms.com/terms/down-round#term", "name": "Down Round", "url": "https://medtechterms.com/terms/down-round" } ] }, { "@type": "BreadcrumbList", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://medtechterms.com/" }, { "@type": "ListItem", "position": 2, "name": "Terms", "item": "https://medtechterms.com/terms" }, { "@type": "ListItem", "position": 3, "name": "Investment & Finance", "item": "https://medtechterms.com/terms?cat=Investment%20%26%20Finance" }, { "@type": "ListItem", "position": 4, "name": "Anti-Dilution Protection", "item": "https://medtechterms.com/terms/anti-dilution" } ] }, { "@type": "FAQPage", "@id": "https://medtechterms.com/terms/anti-dilution#faq", "mainEntity": [ { "@type": "Question", "name": "How does anti-dilution protection affect a MedTech company's overall valuation?", "acceptedAnswer": { "@type": "Answer", "text": "Anti-dilution protection directly impacts equity distribution rather than overall company valuation. However, the presence and terms of such provisions can influence investor perception and willingness to invest, indirectly affecting future valuations." } }, { "@type": "Question", "name": "Are there different types of anti-dilution provisions relevant to MedTech startups?", "acceptedAnswer": { "@type": "Answer", "text": "Yes, the most common types are broad-based weighted-average and full ratchet. Broad-based weighted-average offers partial protection, while full ratchet provides complete protection, repricing shares entirely. The choice significantly impacts ownership in a down round." } }, { "@type": "Question", "name": "What is a 'down round' in the context of MedTech investment?", "acceptedAnswer": { "@type": "Answer", "text": "A down round occurs when a company issues new shares at a lower valuation per share than a previous funding round. In MedTech, this can sometimes follow disappointing clinical trial results or regulatory setbacks like FDA delays." } } ] } ] } --- [ MedTech Terms The authoritative reference ](/) Browse Learn [Latest](/latest) About 1. [Home](/) 2. / 3. [Terms](/terms) 4. / 5. [Investment & Finance](/terms?cat=Investment%20%26%20Finance) 6. / 7. Anti-Dilution Protection [All terms](/terms) Investment & Finance [Startup Lifecycle](/ecosystems/startup-lifecycle) # Anti-Dilution Protection Adjustment that protects investors if the company raises a future round at a lower price. Reviewed by [Christian Espinosa, Founder, Blue Goat Cyber](/authors/christian-espinosa) Last reviewed May 5, 2026 ## Definition Anti- [dilution](/terms/dilution) provisions adjust the conversion price of [preferred stock](/terms/preferred-stock) if the company issues new shares at a lower price than a prior round (a ' [down round](/terms/down-round)'). The most common formula is 'broad-based weighted-average,' which partially compensates earlier investors. 'Full ratchet' fully repriced and is investor-friendly but rare. What the regulation says While not directly addressed by MedTech regulations like 21 CFR 820 or the EU [MDR](/terms/mdr-reporting), anti- [dilution](/terms/dilution) protection is a critical contractual element for medical device companies, influencing financial stability and investor relations, which indirectly supports sustained compliance efforts and product development. ## What this means in practice MedTech down rounds are common after disappointing trial readouts or FDA delays. Anti- [dilution](/terms/dilution) math meaningfully redistributes ownership in those moments. ## Examples - A MedTech startup raises a Series A round at $5 per share. After a failed clinical trial, they need more funding and raise a Series B at $2 per share, triggering anti-dilution provisions for Series A investors. - An investor holds preferred stock with a full-ratchet anti-dilution clause. When the company issues new shares at a lower price, the investor's conversion price adjusts completely to that new, lower price. - A MedTech company with a broad-based weighted-average anti-dilution clause issues new shares in a down round, resulting in a partial adjustment of the conversion price for previous investors, balancing protection with new investment. Common pitfalls - • Misunderstanding the specific anti-dilution formula can lead to unexpected equity dilution for founders and early employees during a down round. - • Failing to negotiate clear anti-dilution terms upfront can create significant disputes and legal challenges during subsequent funding rounds. - • Assuming that anti-dilution provisions will fully protect all early investors overlooks the nuances of different formulas, such as broad-based weighted-average versus full ratchet. - • Overly aggressive anti-dilution terms can make it difficult to attract new investors in a down round, as it disproportionately impacts their potential ownership. ## Frequently asked questions How does anti-dilution protection affect a MedTech company's overall valuation? Anti- [dilution](/terms/dilution) protection directly impacts equity distribution rather than overall company valuation. However, the presence and terms of such provisions can influence investor perception and willingness to invest, indirectly affecting future valuations. Are there different types of anti-dilution provisions relevant to MedTech startups? What is a 'down round' in the context of MedTech investment? ## Related terms Grouped by theme ### Editor's picks · Hand-selected related concepts [ Investment & Finance Dilution Reduction in existing shareholder ownership when new shares are issued. ](/terms/dilution)[ Investment & Finance Down Round Financing at a lower per-share price than the previous round. ](/terms/down-round)[ Investment & Finance Term Sheet Non-binding outline of the key economic and control terms of an investment. ](/terms/term-sheet) ### More in Investment & Finance · Same category [ Investment & Finance 409A Valuation An independent fair-market-value appraisal of common stock used to set tax-compliant strike prices for employee stock options. ](/terms/409a-valuation)[ Investment & Finance Bridge Round Interim financing between priced rounds, usually convertible. ](/terms/bridge-round)[ Investment & Finance Burn Rate Rate at which a company spends cash, typically expressed monthly. ](/terms/burn-rate)[ Investment & Finance Burn Rate and Runway Monthly net cash consumption (burn) and months of cash remaining (runway). ](/terms/burn-runway) Cited by Where this term appears across MedTech Terms. Ecosystems (1) - [Startup Lifecycle](/ecosystems/startup-lifecycle) ## Primary references 3 sources Link health: 3 verified · last checked 2026-06-20 Cooley GO· 1 NVCA· 1 SVB· 1 1. [1 Cooley GO: anti-dilution Verified Cooley GO · cooleygo.com ](https://www.cooleygo.com/) 2. [2 NVCA Model Documents Verified NVCA · nvca.org ](https://nvca.org/model-legal-documents/) 3. [3 Silicon Valley Bank - Healthcare Reports Verified SVB · svb.com ](https://www.svb.com/trends-insights/) Inline markers like \[1\] jump to the matching reference above. Sponsor note ### Diligencing a MedTech cybersecurity posture? Blue Goat Cyber supports investors and acquirers with cybersecurity diligence on connected MedTech assets. [Book a 30-minute discovery session](https://go.bluegoatcyber.com/meetings/blue-goat-cyber/discovery-session) - No obligation - Expert-led from minute one - NDA available on request MedTech Terms is a community resource sponsored by [Blue Goat Cyber](https://bluegoatcyber.com). Definitions are independent of any vendor. On this term Category Investment & Finance Sources 3 Updated 5/5/2026 [Compare with another term](/compare?a=anti-dilution) Learn in 60 seconds Card Lesson Quiz Adjustment that protects investors if the company raises a future round at a lower price. - · MedTech down rounds are common after disappointing trial readouts or FDA delays. - · Anti-dilution math meaningfully redistributes ownership in those moments. - · The most common formula is 'broad-based weighted-average,' which partially compensates earlier investors. Remember this Watch out: Misunderstanding the specific anti-dilution formula can lead to unexpected equity dilution for founders and early employees during a down round. Related terms - [Dilution ](/terms/dilution) - [Term Sheet ](/terms/term-sheet) - [Down Round ](/terms/down-round) You may also need Auto-suggested from Investment & Finance and shared keywords. - [Preferred Stock ](/terms/preferred-stock) - [409A Valuation ](/terms/409a-valuation) - [Convertible Note ](/terms/convertible-note) - [Drag-Along and Tag-Along Rights ](/terms/drag-tag-along) - [Employee Option Pool ](/terms/option-pool) - [Liquidity Event ](/terms/liquidity-event) [All Investment & Finance terms](/terms?cat=Investment%20%26%20Finance) MedTech Terms An authoritative, plain-language reference for the regulatory, quality, cybersecurity, and software terms that shape modern medical devices. Browse - [All terms](/terms) - [A–Z index](/a-z) - [Categories](/categories) - [Ecosystems](/ecosystems) - [Learning paths](/paths) - [Compare terms](/compare) - [Quiz](/quiz) Resources - [FDA Medical Devices](https://www.fda.gov/medical-devices) - [EU MDR](https://eur-lex.europa.eu/eli/reg/2017/745/oj) - [IMDRF](https://www.imdrf.org/) - [Methodology](/methodology) - [Changelog](/changelog) - [Editor: Christian Espinosa](/authors/christian-espinosa) - [About this site](/about) © 2026 MedTech Terms. Reference content for educational purposes - not regulatory advice. A community resource sponsored by [Blue Goat Cyber](https://bluegoatcyber.com)