ESOP Anti-Dilution Protection for Investors & Founders

Investors should not neglect anti-dilution protection when negotiating financing terms, as it is a significant factor. Generally, a weighted average anti-dilution method is the fairest solution, providing protection for investors while limiting dilution for founders and common stockholders. However, the final terms will depend on the negotiating power of each party. Giving up anti-dilution rights in future negotiations can lead to conflicts, so all stakeholders should thoroughly consider the potential implications before agreeing to any anti-dilution clauses.