ROFR (Right of First Refusal)
The right to match any offer before shares can be sold to an outside party.
A right of first refusal gives the company or existing investors the chance to buy shares before they are sold externally, controlling who joins the cap table. Pre-emption rights work similarly for new share issues.
Examples
Investors exercise ROFR when a founder tries to sell to a third party. — The company has ROFR over departing employees’ shares.
How it relates to The Startup Foundry
Knowing how share transfers are controlled keeps your cap table clean and investable.