Business Pitch Dictionary by pitch.dog
Term-sheet economics · Working

Pay-to-play

ELI5

Investors must keep investing or lose some protections.

Used in conversation

“The rescue round includes a pay-to-play provision.”

Definition

A provision requiring existing investors to participate in future financings to preserve specified rights or preferences.

Here “Pay-to-play” means: A provision requiring existing investors to participate in future financings to preserve specified rights or preferences.

Pitch context

You will see “Pay-to-play” in fundraising decks, data rooms, term sheets and investor conversations when the discussion reaches term-sheet economics.

Why it matters: In term-sheet economics, a loose definition can change rights, obligations, approval, disclosure or enforceability.

Caution

Meaning, enforceability and required process vary by jurisdiction and agreement; this definition is not legal advice.

Sources & evidence · 5

Direct term-level sources and supporting source families.