Side Letter

A separate agreement between a company and an individual investor granting rights that are not in the main investment documents.

Example

A short letter giving one angel quarterly reporting, pro-rata rights and an MFN clause.

Other investors may hold side letters too, so the main documents may not describe everyone's actual rights.

Most Favoured Nation (MFN) — A clause entitling an investor to any better terms granted to comparable investors within a defined scope.
Information Rights — A contractual right for an investor to receive a private company's financial statements and other operating updates on a regular basis.
Pro-rata rights — A contractual right to invest enough in a future round to keep your existing percentage of a company rather than being diluted by it.

You will not set the price, but you can ask for the three things that matter — Small investors join rounds on terms the lead negotiated. What remains negotiable is usually information rights, pro-rata rights and a most favoured nation clause - and those are worth asking for every time. (10 min)
A side letter is where your specific rights live, and MFN is how you avoid being the worst-treated investor — Side letters grant individual investors rights outside the main documents. A most favoured nation clause entitles you to any better terms given to comparable investors in the same round. (10 min)