Definition
The sacred privilege granted to investors allowing them to maintain their ownership percentage in future funding rounds by ponying up more cash. It's like a VIP pass that lets you keep throwing money at a company before it becomes wildly successful or spectacularly flames out.
Example Usage
The Series A lead insisted on pro rata rights so they could protect their 15% stake when the inevitable Series B came knocking.
Origin
From Latin 'pro rata,' meaning 'in proportion'—adopted into VC terminology in the 1980s as institutional investors sought to protect their stakes
Fun Fact
Major VCs like Sequoia and Benchmark consider pro rata rights so valuable that they've occasionally passed on deals that didn't include them, even for promising startups.
Related Terms
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See “pro rata rights” in Corporate Speak, Gen-Z Slang, Pirate Speak, and more.
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