A month back, we asked numerous investor if they planned to alter the method they invest or lead rounds during COVID-19— most stated no, but they noted that evaluations were coming down and founders in their portfolio companies were reacting to the crisis.

Northzone’s Paul Murphy forecasted fewer FOMO rounds since investors will “take more time to get to know and diligence the business … and it might likewise take a bit more time to close deals,” including that he would “continue to lead rounds and back fantastic founders.” However, as other investors call their bluffs, companies are trying to find concrete ways to reveal they are open for service.

Round Capital

At least that was the case with First Very First Capital. On Friday, the seed-stage firm revealed that when it leads a first round in a company, it will always take pro rata in the next outside-led endeavor round with a commitment of as much as $3 million.

Pro rata is a provision in an investment agreement that provides the investor a right to participate in future financings. That might negatively signal they do not think in the business’s future if investors do not invest in a company’s pro rata. I asked Brett Berson, a partner at First Round, to use more context about the statement.

“The question ‘is your financier taking their professional rata’ is not necessarily a checkbox response,” Berson stated. “And I believe in a time of maximum unpredictability, what an offered investor was doing 12 months ago might not be what he or she is doing today.”

Article curated by RJ Shara from Source. RJ Shara is a Bay Area Radio Host (Radio Jockey) who talks about the startup ecosystem – entrepreneurs, investments, policies and more on her show The Silicon Dreams. The show streams on Radio Zindagi 1170AM on Mondays from 3.30 PM to 4 PM.