An alternative way that we could work through this calculation is to do the price conversion adjustment based on a narrow based weighted average. And this is where our formula is the same as before, that we need to take the share price before the down rounds and multiply that by the number of shares before the down round, but where we only think about the series A investors. So we take the 3 million series A investors and then add to that the number of shares that would've been issued had the down round taken place at the prior price. So that would be the 1.5 million invested divided by the one share price of the series A round.

We then need to divide all of this by what did actually happen. So the number of shares that the series A investors do hold, plus the number of shares created in the down round for the series B investors, this is the same formula, but where we're using a narrow base weighted average, just using the series A investors shares, not all of the shares in the company. And if we take the series A share price and divide it by the conversion price, what this effectively is saying is had the series A capital round taken place on the same terms as the series B round, the price would've been not one, but 0.667. So as a result, we've gotta give 50% more shares to the series A investors to give them the same terms as the down round effectively is taking place on now. And what we'd have then, founders would still have the 6 million shares. The series A investors would have their original 3 million shares multiplied by the conversion factor of 1.5 to give them 4.5 million shares. And as a result, there would be more dilution if there is gonna be a down round for the founders than we had with the broad based weighted average. After the new shares were created, the founders were only down to a 62.2%. If we use the narrow based weighted average, they're down to 57.1%. So this is more beneficial for the series A investors. When we then have the down round, we can then just see what shares we have. As a result of that. We still have the 3.75 million shares for the series A investors. But the narrow based weighted average calculation for this anti-dilution adjustment, given that we're having a down round, is much more beneficial for the series A investors. They in fact, end up with a bigger stake in the company than the series B investors do. They end up much closer to the 33% stake that they had before the series B investment took place at all.

The final most beneficial approach for the series A investors is to use the full ratchet approach for the price conversion. The way the full ratchet approach works is to say, we're simply gonna say that the series A investors are gonna get the same terms as the series B investors. So as a result, if we take the Original price, which was the 1, and divide it by the 0.4 price that the series B investors are paying for their shares, well the founders will still end up with the 6 million shares. The series A investors won't get their 3 million shares, but we'll rather multiply that by the 2.5 conversion factor to give them 7.5 million shares and they will then take a controlling ownership stake in the company as a result of the down round before the new series B shares are issued. And then after the down round, the founders with their 6 million shares series A investors with their 7.5 million shares and the series B with their 3.75 million shares will result in the tech company having in total 17.25 million shares. But here the series A investors have the majority ownership of the shares in the company at 43.5%. The full ratchet approach is most beneficial for the series A investors and it's most diluted for the founders. Which approach is adopted in terms of the anti-dilution terms will need to be negotiated upfront during the series A investment round.