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Pro-rata rights

Also called: pro rata rights, participation rights

In one line

An investor's right to buy enough shares in future rounds to maintain their ownership percentage.

In plain English

Pro-rata rights let existing investors keep their slice by putting in more money in later rounds, buying shares before new investors can. It mainly concerns investors, not employees.

If you were explaining it to a 5-year-old

An early friend has a rule letting them buy enough new toys each time to always keep the same share of the club.

Why it matters when you sell

Pro-rata rights influence who can invest in future rounds and how the cap table evolves around your stake.

Related terms

DilutionCapitalization tablePreferred stockPriced round

Put it to use

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Sources

A general market-practice term. See how we define and source the glossary in our methodology. General information, not advice.

Educational information only — not financial, tax or legal advice, and not an offer to buy or sell any security. Definitions are general; your own documents and local law govern your situation. PrivateTechShares is independent and not a broker or marketplace.