CCPS explained: the instrument your term sheet is actually about

When an Indian VC invests, they almost never buy plain equity. They buy Compulsorily Convertible Preference Shares — preference shares that MUST convert into equity (typically at a liquidity event or a long-stop date). Until conversion they carry rights that plain equity does not.

Liquidation preference is the headline right: on an exit, the CCPS holder gets their money back (1x, sometimes more) before equity holders see anything. Non-participating means they choose between that preference and converting to take their percentage. Participating means they take the preference AND then share in the remainder — much more expensive for founders, and worth negotiating hard.

Anti-dilution protects the investor in a down round by adjusting their conversion terms. Broad-based weighted average is the moderate, market-standard formula. Full ratchet — resetting their price to the new round’s price entirely — can transfer dramatic ownership in a bad round.

Why this matters practically: these terms are not paperwork, they are arithmetic. Whether your Series A investor’s 1x non-participating preference converts at a ₹300cr exit is a calculation. If your cap table lives in a spreadsheet, that calculation happens ad hoc in a lawyer’s Excel during the most stressful week of your company’s life.