Pro Rata Side Letter (Caymans) by Y Combinator

Updated 17 October 2025

This Pro Rata Agreement grants an investor the right to purchase a pro rata share of Standard Preferred Shares in a future equity financing round. This right is connected to an initial investment made through a Simple Agreement for Future Equity (SAFE) with a Post-Money Valuation Cap. The agreement outlines the terms for this pro rata right, including its termination conditions and provisions for assignment and amendment.

YCY Combinator

PRO RATA AGREEMENT

This agreement (this “Agreement”) is entered into on or about [date of safe] in connection with the purchase by [investor name] (the “Investor”) of that certain simple agreement for future equity with a “Post-Money Valuation Cap” (the “Investor’s Safe”) issued by [company name] (the “Company”) on or about the date of this Agreement. As a material inducement to the Investor’s investment, the Company agrees to the provisions set forth in this Agreement. Capitalised terms used herein shall have the meanings set forth in the Investor’s Safe.

The Investor shall have the right to purchase its pro rata share of Standard Preferred Shares being sold in the Equity Financing (the “Pro Rata Right”). Pro rata share for purposes of this Pro Rata Right is the ratio of (x) the number of Capital Shares issued from the conversion of all of the Investor’s Safes with a “Post-Money Valuation Cap” to (y) the Company Capitalisation. The Pro Rata Right described above shall automatically terminate upon the earlier of (i) the initial closing of the Equity Financing; (ii) immediately prior to the closing of a Liquidity Event; or (iii) immediately prior to the Dissolution Event.

Neither this Agreement nor the rights contained herein may be assigned, by operation of law or otherwise, by Investor without the prior written consent of the Company; provided, however, that this Agreement and/or the rights contained herein may be assigned without the Company’s consent by the Investor to any other entity who directly or indirectly, controls, is controlled by or is under common control with the Investor, including, without limitation, any general partner, managing member, officer or director of the Investor, or any venture capital fund now or hereafter existing which is controlled by one or more general partners or managing members of, or shares the same management company with, the Investor.

Any provision of this Agreement may be amended, waived or modified upon the written consent of the Company and either (i) the holders of a majority of Capital Shares issued from all Safes converted in connection with the Equity Financing held by the Investor and other Safe holders with Pro Rata Rights pursuant to agreements on the same form as this Agreement, provided that such amendment, waiver or modification treats all such holders in the same manner, or (ii) the Investor. The Company will promptly notify the Investor of any amendment, waiver or modification that the Investor did not consent to. The choice of law governing any dispute or claim arising out of or in connection with this Agreement and the submission to jurisdiction of the parties hereunder shall be consistent with that set forth in the Investor’s Safe.

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed and delivered.

[company name]

By:

[company signatory name]

[company signatory title]

[investor name]

By:

[investor signatory name]

[investor signatory title]

About this template

What is this template?

Pro Rata Side Letter (Caymans) by Y Combinator is a free, ready-to-use Banking and finance template you can open, customize, and download on GitLaw. It gives you a professionally structured starting point, so you never have to draft from a blank page. The wording is plain and modern, organized into clear sections that are easy to read, edit, and adapt to your own situation before you share or sign it.

When should you use it?

Reach for this Banking and finance template whenever you need a reliable agreement quickly and want to be sure the essentials are covered. It suits individuals, freelancers, startups, and established businesses alike. Instead of paying for a document drafted from scratch, you can start here, tailor the details to your arrangement, and have a polished draft ready in minutes. Always review the final wording against the laws that apply where you live or do business.

What's typically included?

A well-drafted Banking and finance usually sets out the parties involved, the scope of the agreement, and each side's rights and responsibilities. Expect sections covering key terms and definitions, how long the agreement lasts, how it can be ended, and what happens if something goes wrong. This template brings those building blocks together in a sensible order, so you can focus on the specifics rather than worrying about what to include. Open it to read the full document, then sign up to edit, negotiate, and e-sign it directly in GitLaw.

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