Pro Rata Calculator

What Pro Rata Means

Enter your current fully diluted ownership, then the pre-money valuation and size of the new round. If the round also creates a new option pool out of the pre-money, add it. Switch between exercising in full, taking part of your allocation, or passing, and the table shows what each choice does to your ownership.

Why This Matters

Pro rata is the only mechanism that lets an early investor keep ownership in a company that keeps working. Early positions are bought at low prices but get diluted by every subsequent round, so a seed investor who never follows on can watch a 10% stake fall to 3% by Series C. Pro rata rights let you defend the position at the new price. The cost is that follow-on dollars are expensive, which is why funds size reserves deliberately rather than exercising everything.

A worked example, start to finish

You own 8% of a company after seed. It raises $8,000,000 at a $30,000,000 pre-money valuation, so the post-money is $38,000,000 and the new investors buy 21.05% of the company. If you do nothing, your 8% is diluted to 8% x 78.95% = 6.32%, and you lost 1.68 points. Your pro rata share is 8% x $8,000,000 = $640,000, which buys $640,000 / $38,000,000 = 1.68% of the post-money company. Add that to your diluted 6.32% and you are back to 8.00%. That identity holds every time: a full pro rata check restores exactly the ownership the round took, as long as no new option pool is created alongside it.

Why the option pool breaks the identity

A new option pool is almost always carved out of the pre-money, which means existing shareholders pay for it and new investors do not. Pro rata rights cover new securities sold in the financing; they do not cover reserved option shares. If the round adds a 5% post-money pool on top of the raise, a full pro rata check still leaves you about 5% worse off in relative terms than you started. Set the pool field above and watch the net dilution line move even when you exercise in full.

When investors waive pro rata

Waiving is normal and it is not always a negative signal. Small funds run out of reserves and ration follow-ons to their best two or three positions. Some funds hit concentration limits in their LPA that cap how much of the fund can go into one company. Angels and scouts usually cannot write a pro rata check at Series B prices at all. Others pass on conviction: the price has moved past what the position justifies, or the company has drifted from the thesis. Founders and lead investors frequently ask small holders to waive so the round has room for a new lead, and some rounds are oversubscribed enough that every existing holder gets cut back. A waiver in one round rarely destroys the right for the next one, but read the document, because some waivers are drafted as permanent.

How pro rata appears in a term sheet

In the NVCA model documents the right lives in the Investors' Rights Agreement as the Right of First Offer on new securities, and it typically runs only to Major Investors, meaning holders above a stated share threshold. The model term sheet phrases it as: each Major Investor shall have a right to purchase its pro rata share of any offering of new securities by the Company, subject to customary exclusions for option grants, acquisition shares, and shares issued on conversion. Three details decide what the clause is actually worth: the Major Investor threshold, which can quietly exclude you; the exclusions list, which determines which issuances trigger the right at all; and whether the right terminates at an IPO or qualified financing. Super pro rata, the right to buy more than your current percentage, is a negotiated add-on and is not in the model form.

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What to Do With Your Results

1. 1Check whether you actually qualify as a Major Investor before assuming the right applies to you.
2. 2Size the check against your remaining reserves, not against the allocation on offer.
3. 3Model the same position two rounds forward before committing, since the next round dilutes this one too.