Pro Rata Rights
Definition
Pro rata rights let an investor maintain their ownership percentage by investing in future rounds, buying enough of each new round to avoid dilution.
How it comes up in fundraising
Standard for significant checks; angels and small funds negotiate them via side letters on SAFEs.
Frequently asked questions
Why do investors fight for pro rata?
Venture returns concentrate in a few winners; pro rata is the right to keep buying the winners as they emerge.
Can pro rata rights hurt founders?
Occasionally they crowd hot later rounds, squeezing allocation for new leads; most of the time honoring them keeps loyal investors loyal.
Put this term to work
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