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Pro Rata

What is Pro Rata?

Pro rata is Latin for “in proportion” or “proportionately.” With startup investing, an investor with pro-rata rights will have the option to invest in future funding rounds to maintain their portion of ownership.

For example, say a seed investor owns 5% of your company and you’re raising a new funding round. The investor can choose to invest a proportional amount to maintain their 5% ownership stake rather than having their portion diluted.

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