
How pro rata works in venture capital deals (2017) - tosh
https://techcrunch.com/2017/09/13/how-pro-rata-works-in-venture-capital-deals/
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tw1010
Can HN suggest any good book that compactly deals with "all the non-technical
details you need to know about starting a startup"? Obviously I'm not
expecting anything comprehensive.

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seattleeng
Venture Deals by Brad Feld is a good one. Mind you, I'm an earlyish employee
and not a founder, but the startup I'm at is thankfully transparent and gives
us enough financial metrics for me to put a lot of that book to use in
contextualizing our previous fundraising rounds.

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rdlecler1
I don’t think they needed the extra backstory in this case.

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timvdalen
I disagree, it definitely helps to have a real example and the more tangible
the example is the better it is to follow the explanation. Especially for the
follow-up pieces, it helps to have the history of the company in mind when
looking at the other funding rounds.

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dfee
Pro-rata: proportional. Really that’s about all you need to know.

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Felz
No, actually. In equity financings, the dilution's in the details.

Specifically there are two major ways I've seen pro rata clauses vary: How the
percentage of the company an investor owns is calculated, and what shares that
percentage is multiplied by to get the number of shares that the holder is
entitled to purchase.

Basically, most investors will have terms that calculate percentage ownership
off of amounts that include available but unissued shares of the employee
stock pool, and will be entitled to buy a percentage of the shares directly
issued for the equity financing.

Y Combinator pro rata rights specifically exclude available stock pool from
the calculation for percentage they own, and include shares from convertibles
as part of the percentage they get. This is better for them, of course. (And
closer to intent in terms of preserving ownership)

