Pay To Play

Pay To Play

In venture capital, investors can raise the ante with co-investors by means of a “pay-to-play” provision, requiring that all investors in a portfolio company continue their pro rata financial commitment to the company, or else lose certain rights with respect to 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.