Fundraising
Right of First Refusal (ROFR)
Quick definition
Investor's right to match any third-party offer to buy shares from existing shareholders.
ROFR (right of first refusal) gives current investors first dibs on any shares being sold by other shareholders — they can match the third-party offer before the sale closes. Standard in preferred stock financings. Functions alongside ROFO (right of first offer) and co-sale rights. For founders, ROFR limits your ability to sell shares to outsiders without giving investors first crack.
Related fundraising terms
SAFE (Simple Agreement for Future Equity)
Convertible instrument commonly used for early-stage rounds.
409A Valuation
Independent valuation of common stock used to set option strike prices.
Cap Table
A record of all ownership interests in your company.
Pro Rata Right
An investor's right to maintain their ownership % in future rounds.
Frequently asked questions
- What is Right of First Refusal (ROFR)?
- ROFR (right of first refusal) gives current investors first dibs on any shares being sold by other shareholders — they can match the third-party offer before the sale closes. Standard in preferred stock financings. Functions alongside ROFO (right of first offer) and co-sale rights. For founders, ROFR limits your ability to sell shares to outsiders without giving investors first crack.
- Why is Right of First Refusal (ROFR) important for startups?
- Right of First Refusal (ROFR) is a fundraising concept that matters for startup founders because it directly affects fundraising readiness, financial decision-making, or operational discipline at the stage where mistakes are expensive to undo. Founders who understand it have a meaningfully easier time in diligence, board meetings, and investor conversations.
- What category does Right of First Refusal (ROFR) belong to?
- Right of First Refusal (ROFR) is a Fundraising term in the StartupCFO finance glossary — alongside other fundraising concepts that founders, CFOs, and accountants use in daily startup operations and reporting.
- Where can I learn more about Right of First Refusal (ROFR)?
- Beyond this definition, see the related fundraising terms below, or explore StartupCFO's insights and tools that put Right of First Refusal (ROFR) in context. For specific situations, talk to a fractional CFO who can walk through your numbers.
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