Pro rata rights give an investor the option, but not the duty, to invest in your next rounds so they can keep the same percentage of the company.
Formula
Pro rata allocation = investor's current ownership × size of the new round
Example
An angel owns 5% after your pre-seed. When you raise a $3M seed round, their pro rata right lets them invest up to 5% × $3M = $150K of that round.
Why it matters for early-stage founders
Pro rata takes space in future rounds. If too many early investors hold it, a new lead may not get the allocation they want, which can complicate your next raise.
The common mistake
Granting pro rata to every small cheque. Many founders reserve it for larger investors, for example those above a set minimum investment.
Plan your next round from today
See how ownership shifts across your SAFEs and priced rounds.
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