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Fundraising

What Does Pro-Rata Assignment Mean for a Potential LP Investor and What Legal Paperwork is Involved?

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Community Member
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May 03, 2023
A potential LP is interested in investing in the fund (I wasn't soliciting :slightly_smiling_face:). He asked for pro-rata assignments. Not exactly sure what this means. Also what kind of legal paperwork is behind this?
1 answer
Community Member
Accepted Answer
May 03, 2023
The LP is asking for the ability to invest in future follow-on rounds into your portfolio companies. You allocate an LP a portion of your pro rata tights. This is normally offered verbally and handled by creating an SPV for each deal in the subsequent rounds. It’s common to offer this to investors in your first close.

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