{"id":46778,"date":"2025-01-25T13:54:01","date_gmt":"2025-01-25T13:54:01","guid":{"rendered":"https:\/\/peraltafinancing.com\/angel-investor\/pro-rata-rights-for-angel-investors-yes-please-channel-angels\/"},"modified":"2025-01-25T13:54:01","modified_gmt":"2025-01-25T13:54:01","slug":"pro-rata-rights-for-angel-investors-yes-please-channel-angels","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=46778","title":{"rendered":"Pro Rata Rights for Angel Investors? Yes Please \u2014 Channel Angels"},"content":{"rendered":"<p> <br \/>\n<br \/><img decoding=\"async\" src=\"https:\/\/images.squarespace-cdn.com\/content\/v1\/5d51cedb1d3e9e0001c64b1b\/1672144209865-133A26V112JAU4NG5KJG\/piggy-bank-investment-savings-pixabay-2889046_1280.jpg?format=1500w\" \/><\/p>\n<div>\n<p class=\"\" style=\"white-space:pre-wrap;\">When Channel Angels considers funding technology startups, one of the items we request is \u201cpro rata\u201d rights. The approach ensures that we remain aligned with our <a href=\"https:\/\/www.channelangels.com\/portfolio\"><strong>portfolio companies<\/strong><\/a> when they seek future rounds of funding.<\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">What exactly are pro rata rights? Let\u2019s assume the following hypothetical example:<\/p>\n<ol data-rte-list=\"default\">\n<li>\n<p class=\"\" style=\"white-space:pre-wrap;\">Your business \u2014 called Acme Company \u2014 is seeking to raise $3 million in seed funding. As part of that $3 million seed round, you <a href=\"https:\/\/www.channelangels.com\/funding\"><strong>seek $250,000 in funding from Channel Angels<\/strong><\/a>.<\/p>\n<\/li>\n<li>\n<p class=\"\" style=\"white-space:pre-wrap;\">During our due diligence process, we become impressed with your vision, management team, target market, intellectual property and strategic plan for execution.<\/p>\n<\/li>\n<li>\n<p class=\"\" style=\"white-space:pre-wrap;\">At the same time, you see value in <a href=\"https:\/\/www.channelangels.com\/members\"><strong>Channel Angels\u2019 member experience<\/strong><\/a> in and across the IT channel ecosystem.  <\/p>\n<\/li>\n<li>\n<p class=\"\" style=\"white-space:pre-wrap;\">We ultimately agree on deal terms and deal valuation, and we write one check for $250,000 to help round out your $3 million seed round.<\/p>\n<\/li>\n<\/ol>\n<h2 style=\"white-space:pre-wrap;\">Pro Rata Rights Explained<\/h2>\n<p class=\"\" style=\"white-space:pre-wrap;\">So far, so good. The one extra step we\u2019ll request is <a href=\"https:\/\/www.embroker.com\/blog\/pro-rata-rights\/\" target=\"_blank\"><strong>pro rata rights<\/strong><\/a> \u2014 which allows Channel Angels to maintain our initial level of ownership percentage during during your future financing rounds. Basically, we\u2019re saying \u201cgive us the opportunity to write you additional checks\u201d for your follow-on rounds (Series A, Series B, and so forth). <\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">Admittedly, there\u2019s a chance we may not exercise those pro rata rights. Our decision process involves our overall portfolio at any given moment, near-term investment pipeline, your company\u2019s latest performance and business prospects, and plenty more.<\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">At the same time, some startups <a href=\"https:\/\/www.quora.com\/What-are-the-pros-and-cons-of-giving-pro-rata-rights-to-an-angel-investor-or-an-accelerator\" target=\"_blank\"><strong>avoid offering pro rata rights for a range of reasons<\/strong><\/a>. But in many cases, experienced angels and venture capitalists will avoid such deals because they want to avoid potential dilution in later rounds.<\/p>\n<h2 style=\"white-space:pre-wrap;\">Example Follow-On Round Participation<\/h2>\n<p class=\"\" style=\"white-space:pre-wrap;\">In our case, we\u2019ve participated in multiple follow-on funding rounds because of our continued enthusiasm for numerous companies in our portfolio. Examples include backing:<\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\"><strong>Side note:<\/strong> Special thanks to <a href=\"https:\/\/www.propelx.com\" target=\"_blank\"><strong>Propel(x)<\/strong><\/a> and <a href=\"https:\/\/www.floridafunders.com\" target=\"_blank\"><strong>Florida Funders<\/strong><\/a> for their work introducing our angels to those investment opportunities.<\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">As Channel Angels looks ahead to 2023, we expect to make additional pro rata investments across our portfolio of companies.<\/p>\n<\/div>\n\n","protected":false},"excerpt":{"rendered":"<p>When Channel Angels considers funding technology startups, one of the items we request is \u201cpro rata\u201d rights. The approach ensures that we remain aligned with our portfolio companies when they seek future rounds of funding. What exactly are pro rata rights? Let\u2019s assume the following hypothetical example: Your business \u2014 called Acme Company \u2014 is [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":46779,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12034],"tags":[1219,2214,4552,11223,1190,28235,13922],"dealstore":[],"offerexpiration":[],"class_list":["post-46778","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-angel-investor","tag-angel","tag-angels","tag-channel","tag-investors","tag-pro","tag-rata","tag-rights"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Pro Rata Rights for Angel Investors? Yes Please \u2014 Channel Angels - Som2ny Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fivemor.com\/?p=46778\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Pro Rata Rights for Angel Investors? Yes Please \u2014 Channel Angels - Som2ny Network\" \/>\n<meta property=\"og:description\" content=\"When Channel Angels considers funding technology startups, one of the items we request is \u201cpro rata\u201d rights. The approach ensures that we remain aligned with our portfolio companies when they seek future rounds of funding. What exactly are pro rata rights? 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