An investor without a properly structured Anti-Dilution provision can watch their ownership stake collapse after a single down-round, even when the company is still fundamentally on track for the long term. A well-engineered Anti-Dilution clause resets the conversion price to offset the lost value, but the degree of protection depends entirely on which mechanism was…
A Drag-Along Rights clause without proper protective limits can force a minority shareholder to sell 100% of its stake at a price and on terms it never agreed to, simply because the majority shareholder wants a fast exit. A properly engineered clause still solves the buyer’s holdout problem, but without stripping minority investors of the…