Full ratchet is an anti-dilution method that protects the shareholders from dilution of their equity resulting from a future round of financing at a lower valuation.

If a company issues stock in the new round at a price lower than the price originally paid by the shareholder for the same class of stock, the existing shareholders can subscribe to the shares at the lower share price and prevent dilution of their ownership. Here, the conversion price is adjusted down to match the issuance price of shares in the new round.