# Pro rata rights

> The right to buy into the next round, in the NVCA model's words.

Source: https://lopifi.com/learn/term-sheet-explained/pro-rata-rights
Part of: Lopifi — US GAAP books on autopilot, checked by a CPA (https://lopifi.com)

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**What are pro rata rights for investors?** The right to buy into the next round, in the NVCA model's words.

A [pro rata right](https://lopifi.com/md/glossary/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.

> “if the Company proposes to offer or sell any New Securities, the Company shall first offer such New Securities to each Major Investor.”

— [NVCA Model Investors' Rights Agreement (Oct. 2025), §4.1 (Right of First Offer)](https://nvca.org/model-legal-documents/), Pro rata rights: a Major Investor's right to buy into the next round

**Northwind — Keeping 20%.** After the Seed the new investors hold 20.00% fully diluted. With a pro rata right they could take that share of the Series A — keeping 20.00% as the company grows, if they pay the Series A's price for it.

**Pro rata for Major Investors**
- Pro: A signal of support at the next round
- Pro: Limited to holders above a threshold
- Con: Takes allocation away from the next lead
- Con: Many small holders with pro rata rights crowd a round
- Best for: Investors who will keep backing the company

## Where this page's rules come from

- [NVCA Model Investors' Rights Agreement (Oct. 2025), §4.1 (Right of First Offer)](https://nvca.org/model-legal-documents/) — Pro rata rights: a Major Investor's right to buy into the next round (reference)
- [Y Combinator, SAFE financing documents — Pro Rata Side Letter](https://www.ycombinator.com/documents) — The pro rata side letter (reference)

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