The Pro Rata Clause VCs Use to Block New Investors
The Venture Capital Podcast with Fexingo: VCs, Term Sheets, and Startup Investing · 2026-06-22 · 8 min
Episode notes
In this episode of The Venture Capital Podcast, Lucas and Luna unpack the pro rata clause — a term sheet provision that lets existing investors maintain their ownership percentage in future funding rounds. They explore how top-tier VCs use pro rata to block new investors, drive up valuations, and secure their position in high-growth startups. Using real data from recent rounds and the current market context (ARKK up 6% in five days, Shopify flat despite strong earnings), they explain why founders should think twice before granting broad pro rata rights. The hosts also discuss the rise of secondary market workarounds and what the clause means for retail investors looking at late-stage deals. A must-listen for founders negotiating their first term sheet and anyone trying to understand VC power dynamics. #ProRata #TermSheet #VentureCapital #StartupInvesting #Founders #SeriesA #VCClauses #SecondaryMarket #Dilution #IPO #Business #Finance #Entrepreneurship #FundingRound #InvestorRelations #CapTable #FexingoBusiness #BusinessPodcast Keep every episode free: buymeacoffee.com/fexingo