What are pro rata rights in venture capital?

Pro rata rights let an existing investor participate in future rounds to the extent needed to maintain their ownership percentage. An investor holding 10% with pro rata rights may buy 10% of every subsequent round, resisting dilution as the company raises more.

For seed funds, pro rata is a core part of the model: the option to concentrate capital into winners at later rounds is where much of early-stage return comes from. Whether smaller investors can actually exercise pro rata in hot, oversubscribed rounds is a recurring point of tension.