Deal Terms
Right of First Refusal
A contractual right giving a party the first opportunity to match any offer before shares can be sold to a third party.
Right of First Refusal (ROFR) gives existing shareholders or the company the right to match any offer that a selling shareholder receives from a third party. In venture, ROFRs are standard in investor rights agreements and company bylaws. When an employee or investor wants to sell shares, they must first offer them to ROFR holders at the same price and terms before completing a third-party sale.
In Practice
An employee wants to sell $200K of vested shares to a secondary buyer at $10/share. The company's ROFR gives it 30 days to purchase the shares at $10/share. If the company declines, existing investors get 15 days to exercise their ROFR.
Why It Matters
ROFRs help companies and investors control who enters the cap table. They can complicate secondary sales but protect against unwanted shareholders gaining positions.
Related Concepts
Further Reading
What a Series A Process Actually Looks Like
The Series A is where fundraising gets real — partner meetings, deep diligence, and term sheet negotiations. Here's a realistic week-by-week breakdown of what to expect.
Corporate Venture Capital: How Big Companies Invest in Startups
A practical guide to how corporate venture capital works, how it differs from traditional VC, and how founders can evaluate and negotiate CVC investment on strategic and financial terms.
Secondary Markets for Startup Equity: How to Buy and Sell Private Company Shares
How secondary markets for private company shares work — who buys and sells, how pricing is determined, the legal and tax mechanics, and what both sides need to understand before transacting.
VentureKit
Ready to launch your fund?