Why it matters
Pro-rata rights are normal and useful for investors. The unfairness is asymmetry. If founders lack pro-rata, every subsequent round dilutes you on top of the new investor's stake AND on top of the existing investor exercising theirs. Over three rounds the effect compounds dramatically. Mutual pro-rata aligns incentives; one-sided pro-rata transfers ownership over time.
How to negotiate
Request pro-rata rights for founders on equivalent terms. If the investor refuses, request a major holder threshold (e.g. founders with >5% always retain pro-rata). At minimum, secure pro-rata rights via a side letter so future investors don't strip them at the next round.
Example language
How this clause typically appears in a term sheet. Read it carefully — predatory language is often buried in routine paragraphs.
Each Major Investor shall have the right to participate, on a pro-rata basis, in any subsequent issuance of equity securities by the Company. No corresponding right is granted to the Common Stockholders.
TURNSHEET provides intelligence, not legal advice. This page describes typical market behaviour and common negotiation tactics; your specific deal may have nuances that change the analysis. Always review your term sheet with qualified legal counsel before signing.