Pro-rata rights
The right to invest in future rounds to maintain your existing ownership percentage, rather than being diluted by new investors.
Every new financing round dilutes existing shareholders unless they participate in it. Pro-rata rights give an investor the contractual option — not obligation — to invest enough in each future round to keep their ownership percentage roughly constant, rather than watching it shrink with every raise.
For funds, pro-rata is a core portfolio-construction tool: doubling down on winners by exercising pro-rata rights is often where the bulk of a fund's eventual return concentrates, since winners are exactly the companies that keep raising larger rounds at higher valuations.
Why it matters
As an angel, ask for pro-rata rights on every cheque — they cost you nothing to hold and can be valuable if the company takes off. As an LP, ask a GP directly how much of the fund's reserve capital is set aside for pro-rata follow-ons versus new deals; it's a meaningful signal of portfolio strategy.