Pro Rata Rights

 BothSides

Prorata investment rights give investors the right to invest in a startup’s future fund-raising rounds and maintain their ownership % in the company as the company grows and raises more capital. This is important for nearly every institutional investor because once you have 25-50 investments being able to “follow” the investments that are working well is critical to making money. For institutional money, prorata rights are compulsory and usually non-negotiable. Put simply – if you invested early in Google, Facebook, Twitter, LinkedIn, etc. would you want to give up the right to invest in subsequent private-market rounds?

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