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The Pro Rata Side Letter (YC) under UK law is a legal template that establishes an agreement between a company, typically a startup, and its investors regarding their pro rata rights. Pro rata rights refer to a shareholder's entitlement to maintain their proportional ownership in the company during subsequent equity financing rounds.

This legal document outlines the terms and conditions associated with pro rata rights specifically for investors who are part of the Y Combinator (YC) network. YC is a prominent startup accelerator that provides funding and support to early-stage companies.

The Pro Rata Side Letter aims to clarify and define the rights and limitations of YC investors when it comes to participating in future funding rounds of the company they have invested in. It typically covers provisions such as the deadline for exercising pro rata rights, minimum investment amounts, communication and notification procedures, and any specific terms exclusive to YC investors.

Under UK law, this legal template ensures compliance with applicable regulations and provides a standardized framework for negotiations and agreements between the company and YC investors. It offers a level of transparency and clarity to both parties, facilitating smooth and efficient decision-making processes during subsequent funding rounds.