In other words, if an investor with a proportional right has first acquired a 10% stake in a company, he has the opportunity to invest more in future financing cycles of the company in order to hold a 10% stake. The right-hand pro-rata term is often used in venture capital, CapitalVenture Capital Capital Capital is a form of financing that provides funds to emerging emerging companies with high growth potential in exchange for equity or equity. Venture capitalists take the risk of investing in start-ups in the hope of achieving significant returns if companies succeed. Once you have given pro-rata rights, they tend to survive in the future. This has two consequences. First, you have to negotiate with everyone you`ve given pro-rata rights to in previous agreements, and if you`re okay, the first investors with proportional rights are encouraged to want to own more of your business (they`re also encouraged to make the deal so that you can continue to grow). The idea of a proportional right is essentially related to the notion of dilution. Each new capital financing cycle involves the issuance of new shares. With respect to the issuance of new shares, the percentage of current shareholders (the share of FoundersFounders StockFounder refers to the equity given to the first founders of an organization. This type of stock differs in several important ways from the common shares sold on the secondary market. The essential differences are (1) that the founding shares can only be issued at face value, and (2) it comes with a vesting schedule, investors) is watered down. In other words, current shareholders lose some of their voting rights, as calculated as a percentage. In this case, since the valuation of the company has not increased by a significant amount and the company absorbs enough money during this cycle, all investors are able to participate and maintain their proportional shares.

So historically, including me, including the disposition of large investors, so that anyone who made a big check would get the pro-rata rights guaranteed. To be clear, that doesn`t mean angels don`t have pro-rata rights — it just means they`re not guaranteed. I have liked it a lot, historically, because as a group we have been able to decide what to do instead of requiring unanimity. The SAFE pro rata is a relatively short document. There is not much to understand. All you have to do is decide if you want to give rights to a SAFE investor on a pro-rata basis. As a general rule, you would only give proportional rights to majority investors (those who invest in most of the tours you do) and want to be on your course table for a long time.