"However, a full ratchet formula can also be problematic for the investors in a syndicate. Because the prior money invested is fully protected with regard to price decreases, if.... the company is forced to undertake a dilutive financing, there is no incentive for all of the investors to participate in the new dilutive round. Therefore, the lead investor(s) may have difficultly inducing the smaller investors in the syndicate to continue to participate, and the burden of continuing to fund the company can fall heavily on the lead investor(s). In addition, the application of the full ratchet will be disclosed to the incoming invstors in the new round... in the due diligence process. This will make the company appear significantly less attractive to invest in.. Because the number of pre-financing shares outstanding increases due to the anti-dilution adjustment, the price per share of the new series of preferred stock will decrease. This results in a circular formula"