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MFN (Most Favorable Nation)

Most Favored Nation (MFN) is a term used in international trade agreements to refer to a status granted by one country to another, whereby the receiving country is given the same trade advantages and tariff reductions that the granting country has given to any other country with which it has signed a trade agreement.

In the context of startup investment, a MFN clause in an agreement may require that an investor receive certain terms that are at least as favorable as those given to other investors in subsequent rounds. This clause is intended to prevent an earlier investor from being disadvantaged if later investors receive more favorable terms.