Frequently asked questions
What is the meaning of ratchet in finance?
In finance, a ratchet is a protective measure ensuring investors get better terms if specific conditions, like lower valuations, occur.
What is an example of a ratchet provision?
A ratchet provision might give investors more shares if new shares are issued at a lower price, protecting against dilution.
What does "full ratchet" mean in investing?
"Full ratchet" protects investors by adjusting their shares to the lowest price offered to new investors during a down round.