Right of first refusal (ROFR)

Often granted in VC deals, giving priority to the startup and then the investor in any future stock sale. This provision mandates that existing shareholders must offer their shares to the company and investor before selling to a third party, maintaining the order of priority. Investors may occasionally request a ROFR on future financing rounds, and corporate investors may seek a ROFR on company acquisitions. Founders are advised to avoid both of these provisions.