Venture Capital firms (or VC’s) often invest in early-stage start-ups with uncertain valuations. The terms of a VC’s investment will often be heavily weighted in favour of the VC and may include downside protection. This means that the VC’s investment will be protected in the event that the valuation of your start-up decreases in subsequent financings. One common method used by VC’s for downside protection is known as a “ratchet” clause. A “ratchet” clause is an anti-dilution clause that works to protect, and in some circumstances can even increase, the VC’s proportionate ownership of your start-up, if the value of … Continue Reading
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This blog houses our commentary on the impact of developing Internet, information technology and intellectual property laws, discusses recent technology news and relates insights derived from our experiences in the technology sector. The blog also shares best practices generated by our decrypted, user-friendly and accessible technology and IP team.