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A Pro-rata side letter to Investment agreement gives existing investors the right to maintain their ownership percentage in future funding rounds under Swiss law. It protects investors from dilution by allowing them to participate in new share issues proportionally to their current stake.

These letters are particularly important in Swiss venture capital deals, where multiple funding rounds are common. Investors can exercise their pro-rata rights to invest additional capital when the company raises more money, keeping their voting power and economic interests intact. The agreement typically specifies notice periods, exercise procedures, and any limitations under Swiss Code of Obligations.

Consider adding a Pro-rata side letter to Investment agreement when structuring early-stage investment deals in Swiss startups, especially if you expect multiple funding rounds ahead. This document becomes crucial when initial investors want to maintain their ownership percentage and voting power as the company grows and takes on new capital.

The timing matters most during Series A or B rounds, when new investors enter and existing stakeholders need protection from dilution. Swiss companies often use these letters to attract sophisticated investors who view pro-rata rights as essential for their long-term investment strategy. It's particularly valuable for minority shareholders looking to preserve their influence in future capital raises.

• Full Pro-rata Rights: Grants investors the right to participate in all future funding rounds without caps or restrictions, typically used by major venture capital firms in Swiss deals
• Capped Pro-rata Rights: Limits participation rights to specific future rounds or investment amounts, common in early-stage Swiss startups
• Qualified Pro-rata Rights: Links participation rights to specific conditions like minimum ownership thresholds or performance metrics
• Time-Limited Pro-rata Rights: Sets expiration dates for participation rights, often tied to specific funding milestones or exit events

• Venture Capital Firms: Primary beneficiaries who request Pro-rata side letters to protect their investment positions in Swiss startups
• Angel Investors: Early-stage investors who use these agreements to maintain their ownership stakes through future funding rounds
• Startup Founders: Sign and comply with pro-rata rights to attract and retain quality investors while managing future capital structure
• Corporate Lawyers: Draft and negotiate the terms according to Swiss corporate law and market standards
• Board Members: Review and approve these agreements as part of their fiduciary duties under Swiss governance requirements

• Investment Details: Gather current capitalization table, investment amount, and share class information
• Participation Terms: Define exact pro-rata rights, including any caps or limitations on future rounds
• Notice Requirements: Specify how and when investors must be notified of new funding rounds
• Exercise Period: Set clear timeframes for investors to exercise their pro-rata rights
• Compliance Check: Review Swiss corporate law requirements and existing shareholder agreements
• Documentation: Our platform generates precise, Swiss-compliant pro-rata side letters, ensuring all key elements are properly structured

• Parties: Full legal names and details of the company, existing investors, and authorized signatories
• Pro-rata Rights: Clear definition of participation rights, calculation method, and applicable funding rounds
• Notice Provisions: Detailed procedures for informing investors about new financing opportunities
• Exercise Terms: Specific timeframes and conditions for exercising pro-rata rights
• Transferability: Rules regarding assignment or transfer of pro-rata rights under Swiss law
• Termination Events: Circumstances that end pro-rata rights, like IPO or company sale
• Governing Law: Express choice of Swiss law and jurisdiction for dispute resolution

The Pro-rata side letter to Investment agreement is often confused with the Investment Agreement, but they serve distinct purposes in Swiss investment law. While both documents govern investment relationships, their scope and application differ significantly.

• Primary Function: Pro-rata side letters specifically protect existing investors' rights to maintain ownership percentages in future rounds, while Investment Agreements establish the initial terms of investment and broader shareholder rights
• Timing: Side letters typically come into play during subsequent funding rounds, whereas Investment Agreements govern the initial investment transaction
• Scope: Pro-rata rights focus solely on future participation rights, while Investment Agreements cover comprehensive terms including valuation, board rights, and exit provisions
• Flexibility: Side letters can be easily modified for specific investors, while Investment Agreements usually maintain uniform terms for all participants in a funding round