In venture capital, investors can raise the ante with co-investors employing a “pay-to-play” provision, requiring all investors in a portfolio company to continue their pro-rata financial commitment to the company or else lose certain rights concerning their original investment. The rights can often be anti-dilution rights. In some cases, there is a provision of a portion of pro-rata (e.g., 50%), or investors convert to common equity.
In venture capital, investors can raise the ante with co-investors employing a “pay-to-play” provision, requiring all investors in a portfolio company to continue their pro-rata financial commitment to the company or else lose certain rights concerning their original investment. The rights can often be anti-dilution rights. In some cases, there is a provision of a portion of pro-rata (e.g., 50%), or investors convert to common equity.
