Allows an investor to purchase more shares in the company in the future if the company raises further capital
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A pro rata agreement is an agreement between a startup or early stage company and its investors that gives the investors the right to purchase more shares in company in the future if it raises additional capital. This type of agreement is beneficial for both parties involved, as it allows the startup or company to raise additional funds from its existing investors while maintaining their ownership percentage, and it also gives the investors a priority position in any future rounds of funding.
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SAFE Pro Rata Agreement Template
YCombinator's famous SAFE term sheet comes with a document that lays out a pro rata agreement. Here is that agreement in template format.