Follow-On Investment
Also called Follow-On
An additional investment an existing investor makes in a later round to keep or increase their stake, rather than backing a new company. Often done to exercise pro rata rights.
Why it matters
Whether your early investors follow on is a strong signal to new investors about their conviction. Reserves for follow-ons are a big part of how funds actually make their returns.
For example
A seed investor exercises its pro rata to put another 2 crore into the Series A, signalling conviction to the new lead.
Go deeper
Related terms
Also in Starting Up
See how founders actually handle this on Raising your first round, part of the Starting Up hub.
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