medium · Private Equity
Venture Fund A holds 4.8M shares in a startup with a conversion price of 5.00. The startup raises a new round of $6M at a price of 3.00 per share.
Under a weighted average anti-dilution ratchet, how does the conversion price for Venture Fund A change?
- It increases to $5.59 to compensate for the lower valuation
- It decreases to approximately $4.41
- It resets immediately to $3.00
- It remains at $5.00
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