Pro rata rights
The right to buy into the next round, in the NVCA model's words.
A pro rata right — in the NVCA model, a right of first offer — lets an investor buy its share of the company's next issue of new securities before anyone else can. The model gives it to Major Investors (a threshold the parties set) and sizes it as the investor's common, counting preferred as converted, over all the common outstanding on the same basis.
Pro rata for Major Investors
- Good at
- A signal of support at the next round
- Limited to holders above a threshold
- Watch for
- Takes allocation away from the next lead
- Many small holders with pro rata rights crowd a round
- Best for
- Investors who will keep backing the company
Where this lesson's rules come from
The sources behind this lesson's requirements, by kind. Background reading explains; it is never the authority for a rule. Anything marked as a convention is ours, not the rule-maker's.
- Background reading — not an authority
- NVCA Model Investors' Rights Agreement (Oct. 2025), §4.1 (Right of First Offer) (opens in a new tab)Pro rata rights: a Major Investor's right to buy into the next roundFree to read
- Y Combinator, SAFE financing documents — Pro Rata Side Letter (opens in a new tab)The pro rata side letterFree to read
The words this page teaches
Each links to its glossary definition, which also names the authority behind it and the components that render it.