Q
Pro rata rights
A
Pro rata rights give an investor in a private company the right to participate in a subsequent round of funding to maintain his/her level of percentage ownership in the company. Pro rata rights are not always granted to investors and cannot always be enforced. (Note that FundersClub has pro rata rights in many, but not all, of the investments it makes. When a FundersClub’s portfolio company in which FundersClub has pro rata rights raises an additional round of funding, FundersClub may have the opportunity to participate. In this event, FundersClub typically gives first opportunity to invest in any new fund formed to invest to the investors in the original fund which invested in that startup.)
