Pro-rata rights allow investors to maintain their percentage ownership in future funding rounds.

Investors should exercise their pro-rata rights to maintain their ownership percentage during subsequent funding rounds, as early investors can face significant dilution otherwise.

Founders need to be aware that their ownership percentage can decrease significantly due to dilution from SAFEs and new equity rounds, so they should plan accordingly for future fundraising. The percentage of ownership for SAFE investors is based on the valuation cap in the SAFE, and if the priced round valuation is higher than the cap, they convert at the cap, receiving more shares for the same investment than Series A investors.

The cap table shows the ownership distribution among founders, SAFE investors, and priced round investors, highlighting the differences in share types.

The number of shares an investor receives is calculated by dividing the investment amount by the price per share, which is based on the company's valuation.

In a priced round, the SAFE converts into shares based on the pre-money valuation, which includes the increased options pool.

It's crucial to understand how much of your company you've sold to investors at all stages of your company's life cycle and how that affects your ownership.

The post-money valuation is calculated by adding the pre-money valuation to the total amount raised, which determines the ownership percentages for new investors.

In a non-priced round, investors often have a valuation cap that sets an upper limit on the company's valuation for future share conversions, rewarding early investors with more shares if the company grows significantly.