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Seed VCs are turning to new ‘pro rata’ funds that help them compete with the big firms

TechCrunch · 10m

SaaS Ventures, along with other investment firms like Alpha Partners and SignalRank, are helping seed-stage and Series A VCs exercise their pro-rata rights. Pro-rata rights allow VCs to buy more shares in a company during subsequent funding rounds to maintain their ownership percentage. However, in later rounds, new lead investors often want their preferred allocation, potentially squeezing pro-rata investors out of the round. These investment firms provide capital to seed-stage VCs, enabling them to participate in later rounds and exercise their pro-rata rights. The trend of funds dedicated to pro-rata rights is gaining traction as VCs face challenges in funding these rights due to higher valuations.