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Pro Rata Definition

pro rata – adj : finance/legal term; reflective of proportional shares or ownership. An individual’s or entity’s pro rata share is their due or proportional share. The term pro rata share is often used when discussing ownership, financing, and fundraising.
Example: If you own 50% of a company, your pro rata share of the profits will be 50%. If the company were to raise $2 million in its next financing round and you were asked to invest your pro rata share, you would invest $1 million (or 50 percent of $2 million). If you didn’t invest at least $1 million, your ownership stake of 50% would be diluted (proportionally reduced).

Adapted from "The CompanyCrafters Entrepreneur's Dictionary"
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