antidilution clause

Clause inserted into an agreement to finance a new venture, protecting the investors' equity from being diluted in further financing rounds. It is common practice for investors to reserve the right to make further investments in future stages of financing. Depending on funding availability, investors may be able to insert an antidilution clause, favouring them over future investors, and protecting their stake at the expense of the other shareholders. This is to the advantage of those investors with the benefit of an antidilution clause because they will be able to keep the same proportion of equity without making a proportionately larger investment.