Pro Rata Rights

Pro-rata rights give investors the option (not the obligation) to invest in a company's future financing round. Pro-rata rights vary in force. They might only apply to the next financing, or to more than one future financings. Most often, those rights are dependent on a certain ownership in the company and thus only granted to larger investors.

Typically pro-rata rights are given to larger investors in rounds. Depending on their strategy, investors may or may not take up their pro-rata rights in subsequent rounds of financing.

 

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