The right (but not obligation) of an investor to participate in future funding rounds to maintain their current ownership percentage, preventing dilution.
Why it matters: VCs rely heavily on pro rata rights. It allows them to double down on their winners. If they own 10% of a company, pro rata gives them the right to purchase 10% of the next round.
In practice: An investor owns 10% of a startup. The startup raises a new $10M round. The investor exercises their pro rata right to invest $1M in this new round to avoid being diluted.