Pro Rata Rights
Definition
Pro Rata Rights: Pro rata rights allow existing investors to maintain their ownership percentage by participating in future funding rounds. If an investor owns 10% and has pro rata rights, they can invest enough in the next round to keep their 10% stake.
Example Usage
“Our seed investors exercised their pro rata rights in the Series A to maintain their 15% stake.”
Common Misconceptions
Related Terms
Dilution
Dilution occurs when a company issues new shares, reducing existing shareholders' ownership percentage. In each funding round, founders and early inve...
Term Sheet
A term sheet is a non-binding document outlining the key terms of a proposed investment, including valuation, investment amount, board composition, li...
Series A
Series A is typically the first significant venture capital funding round after seed, usually ranging from $5M to $20M. At this stage, startups are ex...
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