ratchet
B1CEFR level
25/100Rarity: fairly common
TechnicalRegister
Law noun
An anti-dilution mechanism resetting an earlier investor's conversion price down to the price of a later, cheaper round.
The down round triggered a full ratchet, and the common got crushed on the cap table.
Business noun
An anti-dilution mechanism that adjusts an investor's shareholding if later shares are issued more cheaply.
A full ratchet clause badly diluted the founders when the next round priced lower.
Rarity runs from 0 (a word everyone knows) to 100 (almost never seen outside specialist or literary writing). Level is the word's real difficulty on the CEFR scale, from A1 to C2.
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