October 26, 2026
Pro rata rights let an existing investor buy enough of a future round to keep their ownership percentage. They're a standard, generally acceptable term for lead and larger investors, usually called "Major Investors" in priced-round documents, and they're the right granted in the Y Combinator SAFE side letter. Give them to investors who write meaningful checks and are likely to follow on, not to every small angel, and don't agree to "super pro rata."
Key takeaways
A pro rata right gives an investor the option, but not the obligation, to buy part of a future round so their ownership percentage doesn't drop. In NVCA and Series Seed documents, the right usually appears as a right of first offer (sometimes called a preemptive right) in the investors' rights agreement. When the company plans to sell new securities, it must first offer the Major Investors their share.
The standard right has exceptions. It doesn't apply to option grants under the equity plan, conversions of SAFEs, notes or preferred stock, stock splits, or other excluded issuances such as board-approved strategic deals. It's a right to participate in new fundraising, not a right to buy every share the company ever issues.
Don't confuse it with a right of first refusal, which lets the company or investors buy shares an existing stockholder wants to sell. See Right of First Refusal.
An investor's pro rata share is their ownership percentage on a fully diluted basis, applied to the new shares sold in the round.
Example. An investor owns 5% of the company on a fully diluted basis. The company raises a $5,000,000 round. The investor can buy up to 5% of the round, or $250,000, which keeps them at roughly 5% after the round.
Two details matter. The percentage should be fully diluted. And the right usually covers only the shares offered to new investors, not shares issued when SAFEs or notes convert in the same round. Investors typically have 10 to 20 days after the company's notice to say whether they'll take their allocation.
Y Combinator publishes a short pro rata side letter that many SAFE investors ask for. It gives the SAFE holder the right to buy its pro rata share of the preferred stock sold in the priced round in which the SAFE converts, measured by the shares its SAFE converts into. The right ends when that round's first closing happens. It doesn't carry into later rounds. From then on, pro rata depends on the priced-round documents and the Major Investor threshold.
Our default is to grant the side letter to the lead and to investors writing meaningful checks, and to keep it uniform when you do. Small angels don't need it, and every side letter is one more thing to track at conversion. See SAFE.
Because the same label can describe rights of very different sizes. What sets the size is the denominator, the number the investor's holding is divided by.
The standard forms divide by the whole company. The NVCA model investors' rights agreement lets each Major Investor buy the portion of new securities equal to the common stock it holds, counting its preferred stock, options and warrants as converted, divided by all common stock outstanding on the same as-converted basis. That base includes outstanding options and warrants but not pool shares that haven't been granted. The YC pro rata side letter divides the shares the investor's SAFE converts into by the "Company Capitalization" defined in the YC SAFE: the company's capitalization just before the priced round, including all SAFEs and notes and the unissued option pool, but generally not the pool increase made for the round. For a SAFE that converts at its cap, that works out to the purchase amount divided by the post-money valuation cap, applied to the preferred stock sold for new money in the round.
The version to avoid divides by the investor's own round. Wording such as "a share of the next round equal to its share of this round" reads as harmless and is far larger.
Example. An angel puts $100,000 into a $1,000,000 priced seed round at an $8,000,000 post-money valuation, so it owns 1.25% of the company. Nothing else is issued before the company raises a $6,000,000 Series A.
| Pro rata measured against | Angel's percentage | Right in the $6,000,000 Series A |
|---|---|---|
| The whole company | 1.25% | $75,000 |
| Its own seed round | 10% | $600,000 |
The second version is eight times larger. If every seed investor has it, together they hold 100% of the seed round and so a first claim on the entire Series A, and your new lead gets its allocation only if they waive. A footnote to the NVCA form describes a related variant that divides by the shares held by the Major Investors alone, which, fully exercised, gives those investors all of the new securities. Accept only the whole-company version.
Watch for lookalikes that do the same job under another name: a side letter promising an investor a fixed percentage or a fixed dollar amount of the next round, or a warrant to buy a set amount at the next round's price. Treat them like super pro rata. For SAFE investors, the YC side letter already uses the whole-company base. If an investor sends a custom side letter instead, check that it doesn't measure the right against the SAFE round or anything else smaller than the company's full capitalization.
In a priced round, pro rata and information rights go to Major Investors, meaning investors who hold at least a set dollar amount or number of shares. That threshold is a real negotiating point, because it decides how many holders you owe notices, financial reports and pro rata offers.
Set it so only a handful of investors qualify. At seed, a threshold of $100,000 to $250,000 invested is common. At Series A, it's often $500,000 to $1,000,000. Let affiliated funds combine their holdings to qualify, but don't set the bar so low that every angel clears it.
Super pro rata is a right to buy more than your pro rata share in a future round, for example to increase ownership from 5% to 7%. Decline it. It takes allocation away from the next lead and signals to that lead that an existing investor has pre-claimed part of the round. See Should I Take a Seed Check From a VC That Wants to Lead My Series A?.
A new lead investor usually has an ownership target, often around 20% in a Series A. If existing investors exercise all their pro rata, there may not be room for the lead's target, and the lead may ask existing investors to waive or cut back. That's common, and most documents let a majority of the Major Investors waive the right for everyone. You'll have an easier time if you've been selective about who has the right in the first place.
Pro rata also sends a signal. An existing investor who follows on helps the round. One who has the right and declines can raise questions for the new lead, so ask your investors early whether they keep reserves for follow-on investments. See Equity Dilution and Protective Provisions.
Go deeper: For a full walkthrough, see our Founder Guide to SAFEs and Founder Guide to Series A.
If you'd like help with SAFE side letters or a priced-round term sheet, see our SAFE services or contact us. See My Series A Lead Wants My SAFE Holders to Change Their Terms. What Should I Do?.
