Glossary
Broad-Based Weighted-Average Anti-Dilution
The most common anti-dilution formula in Indian VC rounds — adjusts conversion price based on both new round price and total shares outstanding (broad). Founder-friendlier than narrow-based or full ratchet.
By Amit Tyagi, Fitoor Capital · AletheiaAI Glossary
Definition
Broad-Based Weighted-Average Anti-Dilution is the standard anti-dilution formula in Indian VC rounds. It adjusts the conversion price of existing preferred shares based on both the new round's price AND the total weighted-average impact on cap table.
The 'broad-based' formula counts all outstanding shares (common + preferred + options + warrants); 'narrow-based' counts only preferred — making narrow-based more punitive to founders.
India Context
Broad-based weighted-average is the default in Indian institutional VC rounds in 2026. Narrow-based and full ratchet are rare except in bridge financings or late-stage deals with specific risk concerns. Founders should default to broad-based and resist any push to narrow-based.
Example
Investor put ₹3Cr at ₹30Cr post-money for 10% (CCPS at ₹1000/share). 18 months later, a down round prices the company at ₹20Cr post-money. With broad-based weighted-average: investor's conversion price drops to ₹X (calculated by formula) such that investor's effective ownership rises from 10% to ~11.5% — small adjustment. With narrow-based: adjustment would be ~13%; with full ratchet: ~15%.
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