In some cases this could be angel investors simply not doing what's in their best financial interest, either short-term or not at all. If one gets the reputati

In some cases this could be angel investors simply not doing what's in their best financial interest, either short-term or not at all. If one gets the reputation of always giving up one's pro-rata rights, then you might as well not have them, right? It's interesting to consider in what circumstances consenting to surrendering their pro-rata might be rational behavior. The surrender is financially equivalent to doing the round at a lower valuation -- as angel investors have effectively sold their pro-rata rights back to the founders, who give them to the new investors. However, compared to simply doing the lower-valuation round, this approach saves more face for the angel investors.