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A Pro-rata side letter to Investment agreement gives existing investors the right to maintain their ownership percentage when a company issues new shares in future funding rounds. It's a common protection that Singapore investors request, especially in startup investments, to avoid having their stake diluted when the company raises more capital.

This side letter typically attaches to the main investment agreement and spells out exactly how these participation rights work - including notice periods, maximum investment amounts, and any conditions that must be met. Under Singapore law, these rights help balance investor protection with the company's need for flexibility in future fundraising.

Consider adding a Pro-rata side letter to Investment agreement when you're making a significant investment in a Singapore startup or growth company and want to protect your ownership stake long-term. This document becomes essential if you anticipate the company will need multiple funding rounds and you want to maintain your percentage ownership.

Early-stage investors particularly benefit from these letters when investing in high-growth sectors like technology or biotech, where companies often require several capital raises. The agreement helps you avoid unexpected dilution of your investment and ensures you can participate meaningfully in the company's future success, while maintaining compliance with Singapore's investment regulations.

• Basic Pro-rata Rights: A standard Pro-rata side letter to Investment agreement that gives investors the right to maintain their ownership percentage in future funding rounds, typically used for early-stage investments
• Full Participation Rights: An expanded version that includes both pro-rata rights and additional participation privileges in different types of securities offerings
• Qualified Pro-rata Rights: Contains specific conditions or caps on the pro-rata rights, often limiting them to certain funding rounds or total investment amounts
• Series-Specific Rights: Tailored for specific investment series, with terms that change based on the company's growth stage and valuation

• Venture Capital Firms: Primary users of Pro-rata side letters, requesting these rights to protect their investment position in promising startups
• Angel Investors: Individual investors who seek these agreements to maintain their ownership stake through future funding rounds
• Corporate Legal Teams: Draft and review these letters to ensure compliance with Singapore's investment regulations and protect company interests
• Startup Founders: Sign and implement these agreements, balancing investor rights with flexibility for future capital raising
• Investment Banks: Often advise on these agreements during funding rounds, particularly for later-stage companies

• Investment Details: Gather current ownership percentages, investment amounts, and company valuation figures
• Future Funding Plans: Document anticipated funding rounds, timelines, and expected capital requirements
• Notice Requirements: Determine how and when investors will be notified of new funding opportunities
• Participation Limits: Specify any caps on pro-rata participation rights and investment thresholds
• Compliance Check: Review Singapore's investment regulations and corporate law requirements
• Document Review: Use our platform to generate a legally sound pro-rata side letter that includes all mandatory elements and minimizes drafting errors

• Identification Section: Names and details of the investor, company, and reference to the main investment agreement
• Pro-rata Rights Definition: Clear explanation of how the participation rights work and calculation method
• Notice Provisions: Specific timeframes and methods for notifying investors of new funding rounds
• Exercise Mechanics: Process and deadlines for exercising pro-rata rights
• Termination Clauses: Conditions when pro-rata rights expire or become invalid
• Governing Law: Explicit statement that Singapore law governs the agreement
• Execution Block: Proper signature spaces for all parties, with company seal requirements if applicable

A Pro-rata side letter to Investment agreement is often confused with a standard Investment Agreement, but they serve distinct purposes in Singapore's investment landscape. While both documents deal with investment terms, their scope and application differ significantly.

• Purpose and Scope: Pro-rata side letters focus specifically on future investment rights, while Investment Agreements cover the entire initial investment relationship including valuation, share classes, and governance rights
• Timing of Effect: Pro-rata rights typically activate in future funding rounds, whereas Investment Agreements govern immediate investment terms
• Document Structure: Side letters are shorter, focused documents that supplement the main agreement, while Investment Agreements are comprehensive standalone contracts
• Legal Dependencies: A Pro-rata side letter requires an existing Investment Agreement to be valid, but an Investment Agreement can exist independently