Pro rata is a bad term for founders
I don't agree with this, pro-rata rights protect investors from dilutionary events which they have no control over. I guess that's one-sided in the way that any "right" is in a legal contract, but that's a weird way to frame it.It's also incorrect to frame the option as "free", you're only observing market behavior in a world in which the option exists, not one in which it doesn't exist. You can't say that investors would have the exact same behavior (in terms of prices, terms, etc) in a world in which they rarely or never got pro-rata. Maybe, but probably not.