Investor question 42 of 50 · Valuation, cap table & terms
“Do existing investors have pro-rata rights?”
Short answer: the investor is really asking how much room is there in the next round? Answer in three steps: (1) list who has pro-rata and their entitlement; (2) say who is likely to exercise; (3) show what's left for new investors.
What they're really asking
How much room is there in the next round? Investors rarely care about the question on its own. They're testing whether you know your numbers cold, whether your assumptions are honest, and whether you can explain them simply.
How to answer, step by step
- List who has pro-rata and their entitlement.
- Say who is likely to exercise.
- Show what's left for new investors.
An example answer
Our seed lead has pro-rata. At the Series A, that's about $600k of a $5M round.
Figures are from Loopdesk, the fictional SaaS company in our sample files. Swap in your own numbers and keep the structure.
The answer that loses trust
Avoid
Not knowing who holds pro-rata.
Where the proof lives
Before the meeting, find the number behind your answer. In our workbooks it lives in: Pro-Rata. If you can open that tab and point to it, the follow-up question is easy.