But the author doesn't indicate how that can be problematic.
How do existing requirement to allow previous investors in the round, contribute to a 'warping' or 'problems'?
I mean, if pro-rata is only designed to prevent dilution - well that should not be so bad. That means in any given new round, there should be enough room for new investors, no?
It also should be less painful in early rounds when investors own a smaller amount.
Comments
It's true that a pro-rata has material value.
But the author doesn't indicate how that can be problematic.
How do existing requirement to allow previous investors in the round, contribute to a 'warping' or 'problems'?
I mean, if pro-rata is only designed to prevent dilution - well that should not be so bad. That means in any given new round, there should be enough room for new investors, no?
It also should be less painful in early rounds when investors own a smaller amount.
Would it possible to do 'partial pro-rata'?
Pro rata means fewer new investors (for the same amount raised) or more dilution (for the same number of new investors)