Pro Rata

An investor's right to invest more to hold their percentage

What it is

A pro-rata right lets an existing investor put more money into future rounds to keep their ownership percentage from shrinking. If they own 10% and the company raises again, the right lets them buy enough of the new round to stay at 10%. It is a way to defend against dilution.

Why it matters

For investors, pro-rata rights are how they keep backing winners and protect their stake in breakout companies. For founders, granting them affects how much room is left for new investors in later rounds.

Resources

NVCA Investors' Rights Agreement

nvca.org

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