preemptive rights

Definition

The right to participate in future financing rounds to maintain ownership percentage, preventing dilution through passive-aggressive legal provisions. Pro rata rights by another name, somehow more intimidating.

Example Usage

Our seed investors have preemptive rights, which they'll definitely exercise if we're winning and definitely ignore if we're dying.

Origin

Corporate law dating back to 19th century shareholder protections

Fun Fact

Preemptive rights are often waived in favor of simpler pro rata provisions because lawyers couldn't agree on what 'preemptive' actually means.

Source: Corporate law and shareholder rights terminology

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