Legal & Compliance
Demand Registration Rights
Investor rights that allow them to compel a company to register their shares with the SEC for public sale.
Demand registration rights give investors the ability to force a private company to file a registration statement with the SEC, enabling the investors to sell their shares publicly. These rights typically become exercisable after a specified period (often 3-5 years) or upon certain conditions. They're a powerful tool for investors seeking liquidity when a company is reluctant to go public. The number of demand registrations is usually limited (1-3 times).
In Practice
Five years after the Series C, the lead investor exercised their demand registration rights, compelling the profitable but private company to file an S-1 and pursue an IPO that the founders had been delaying.
Why It Matters
Demand registration rights are the investor's ultimate liquidity card. They ensure that investors aren't held hostage by founders who prefer to stay private indefinitely, even when a public offering would benefit shareholders.
VC Beast Take
Demand rights are rarely exercised but always negotiated. They're the nuclear option in the investor-founder relationship — most effective as a threat.
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