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

Investors should ensure their rights under a SAFE are respected during conversion rounds, particularly regarding pro-rata rights, as ignoring these rights breaches the contract.

It's crucial for founders to understand their dilution when raising money through SAFEs or convertible notes, as they may end up owning significantly less of the company than expected after a priced round.

Pro-rata rights were not included in the original SAFE conversion round due to the different nature of seed rounds in 2013, but investors can negotiate side letters for these rights.

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 lead investor in a priced round typically negotiates the creation of an option pool for new employees, which can dilute existing shareholders but not the new money being invested.

Investors should maintain transparency with founders regarding their rights and any changes to their agreements, fostering a strong relationship.

When calculating ownership percentages after a priced round, it's important to remember that the total number of shares includes both common and preferred shares, which have different rights and privileges.

It's important to understand the implications of raising a large round, such as giving up control and how it affects future fundraising and equity distribution.