Fundraising
Pro Rata Right
Quick definition
An investor's right to maintain their ownership % in future rounds.
A pro rata right lets an existing investor invest in future rounds at their current ownership percentage, avoiding dilution. Standard in VC term sheets. Founders should track who has pro rata rights and how much future capital is implicitly reserved.
Related fundraising terms
SAFE (Simple Agreement for Future Equity)
Convertible instrument commonly used for early-stage rounds.
Convertible Note
Debt that converts to equity at the next priced round.
409A Valuation
Independent valuation of common stock used to set option strike prices.
Cap Table
A record of all ownership interests in your company.
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