Frequently Asked Questions

What is a preferential right?

A fundraising is usually not a one-off event. Most growing companies raise funds several times, in different funding rounds. There are several reasons for this. It could be that the company needs fresh capital to expand, for example, but it could also be that a new shareholder wants to buy in or that the company needs capital for an acquisition. The reasons can vary, but the process is the same: the company opens a new fundraising round. With this new round comes a new valuation. The company evolved and the valuation from the previous round is probably no longer appropriate for the current situation.

When new capital is raised, the proverbial cake gets a little bigger. The percentage owned by the already existing investors from previous rounds gets a bit smaller. The law provides a right for these existing investors to participate in the new round. This will allow them to reinvest and keep the percentage they hold in the company stable. They will not be diluted.

At Spreds, we always propose a preferential right campaign to the existing investors for these new capital rounds. You are automatically invited if you hold participative notes from a previous round in your Spreds investment portfolio.