Drag-Along Rights
A provision letting a majority of shareholders force minority shareholders to join in an approved sale of the company.
Drag-along rights let a defined majority of stockholders (often preferred holders plus a majority of common, or simply a board and stockholder majority) compel all remaining shareholders to sell their shares on the same terms if the company agrees to an acquisition. Without this provision, a small holdout shareholder could theoretically block or complicate a deal the rest of the company wants.
The clause exists to prevent deal friction — an acquirer generally wants to buy 100% of the company cleanly, and a handful of dissenting small holders (early employees, angels) could otherwise slow or derail closing. It's standard in nearly every venture financing and rarely a point of real negotiation beyond the exact voting threshold required to trigger it.
Make sure the drag-along threshold in your certificate of incorporation is reasonable (majority of both preferred and common, not preferred alone) so a coalition of investors can't force a sale that common stockholders and founders oppose.
Can drag-along rights force a founder to sell against their will?
Yes, if the required voting threshold approves the sale — that's the entire point of the provision, which is why the threshold itself (who has to agree) is worth scrutinizing in the term sheet.
Related terms
Run the numbers yourself: dilution, SAFE conversion, and fund-returner calculators.