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

TechCrunchTechCrunch · 5m
Seed VCs are turning to new ‘pro rata’ funds that help them compete with the big firms

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.

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