Stanford GSB Professor on Startups & Investors

Pro Rata Rights: The Least Negotiable Term in Venture Capital

VC 101: Cash Flows in Follow-On Rounds — Part 2 of 5

Ilya Strebulaev's avatar
Ilya Strebulaev
Jun 09, 2026

My colleagues and I conducted many venture capital surveys. When we ask investors to rank the twelve most important contractual terms, one term stands out: pro rata rights. We specifically asked how flexible VCs are in negotiations of these terms. They are least flexible on pro rata rights.

Not liquidation preferences, not board seats, not anti-dilution …

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