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What is a "top-off" right?
This is a special right that some venture capital firms seek, which lets the VC buy additional shares of stock to return its ownership to a set percentage of the company. Most VC anti-dilution rights let the VC's percentage interest in a company decrease over time while protecting the economic value of the VC's investment by discouraging later investments at lower valuations; a top-off right protects the VC's percentage interest directly, without reference to value. A typical top-off right lets the VC buy more shares at the time of each future investment by others, so that the VC can keep at least a pre-set minimum percentage of the company.
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