pro rata

Definition

The right to maintain one's ownership percentage in subsequent funding rounds by investing additional capital proportionally. The 'I called dibs' clause of venture capital.

Example Usage

We exercised our pro rata rights in the Series B to avoid dilution, investing another $2M to maintain our 15% stake.

Origin

Latin phrase meaning 'in proportion,' used in finance since the 16th century

Fun Fact

Pro rata rights are worthless in failing companies (who wants to throw good money after bad?) but incredibly valuable in winners, making them asymmetrically important.

Source: Corporate finance and proportional investment rights

Related Terms

Beginner

Founder

The person who started a company and will remind you of this fact in every meeting, email signature, and LinkedIn post until the heat death of the universe. They wear the title like a crown, even when the kingdom is a WeWork desk and two interns.

🚀 Startup / VC

Intermediate

diluting

The act of reducing ownership percentage by issuing new shares, or what happens to founders' equity every time VCs open their checkbooks. In chemistry, it means adding solvent to weaken a solution; in startup world, it means your 50% stake just became 30% and you're supposed to smile because the company is now "worth more." The most expensive way to raise money without technically losing money.

🚀 Startup / VC

Beginner

co-founder

The person you start a company with based on four hours of friendship and mutual delusion, who will become either your closest ally or your most expensive breakup. Dating is easier than finding a compatible co-founder.

🚀 Startup / VC

Beginner

graybeard

An experienced entrepreneur or advisor, typically older, who's seen multiple technology cycles and startup failures. They provide wisdom, pattern recognition, and constant reminders that everything has been tried before.

🚀 Startup / VC

Intermediate

nail it then scale it

The strategy of perfecting product-market fit and unit economics in one market before expanding broadly. It's the anti-blitzscaling approach that prioritizes learning over land grabbing.

🚀 Startup / VC

Beginner

founder vesting

A schedule requiring founders to earn their equity over time, typically 4 years with a 1-year cliff. The investor-imposed acknowledgment that founding a company doesn't mean you'll stick around to build it.

🚀 Startup / VC

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