Pro Rata Rights

Definition

Pro rata rights allow an existing investor to participate in a future financing to maintain ownership, typically by buying a proportional share of the new issuance (subject to terms and allocation).

Example

If you own 5% and the company raises $10M, a simplified pro rata check is about $500k to maintain 5%.

How to use it

• A rough check-size estimate is current ownership % * round size (priced equity, simplified).
• Your ability to take pro rata can be limited by allocation and company discretion.
• Confirm whether pro rata applies to the full round or only to a portion.

Common mistakes

• Assuming full pro rata is always available (many rounds are oversubscribed).
• Ignoring other dilution sources (option pool increases, SAFE/note conversions).
• Modeling pro rata without a fully diluted share count.

Why this matters

This term matters because cash timing and risk are usually the difference between a plan that works on paper and a plan that survives. Use consistent definitions so decisions are comparable over time.

Practical checklist

• Write a 1-line definition for "Pro Rata Rights" that your team will use consistently.
• Keep the time window consistent (weekly/monthly/quarterly) when comparing trends.
• Segment results (channel/plan/cohort) before drawing big conclusions from blended averages.
• Use a calculator that references this term (e.g., Pro Rata Investment Calculator) to sanity-check assumptions.
• Read the related guide (e.g., Pro rata rights: what they mean and how to estimate your check size) for context and common pitfalls.

Where to use this on MetricKit