Defending Fund Rights in Hostile Down-Round Recapitalizations
When a new lead investor attempts a cram-down recapitalization that wipes out early seed investors, knowing how to defend pro-rata rights is essential.
Amit KasliwalCEO & Founder, Dehurdle
October 16, 20234 min read
The Major Investor Pro-Rata Defense
Recommended Spoken Script
"Under Section 4 of our Series Seed Investor Rights Agreement, our fund holds contractual major investor pro-rata rights. While we support new capital entering at market terms, we will fully exercise our pro-rata allocation to maintain our 8% ownership and decline any non-standard punitive pay-to-play conversion."
The 2-Minute Practice Drill
2-Minute Spoken Drill
The 2-Minute Practice Drill
Practice term sheet recapitalization debates in Dehurdle.