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Why is there such a large founder to early employee equity drop-off? - Quora

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1 vote by Marc Bodnick Intellectual property + cash + cash equivalent investments such as. 1 vote by Elad Gil It's a risk/reward, supply/demand power equilibrium. Even if your company succeeds, there is absolutely no guarantee your equity will not be wiped out in a down round. This answer. I'm always su.

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How to Fund a Startup

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A lawyer I asked about it said: When the company goes public, the SEC will carefully study all prior issuances of stock by the company and demand that it take immediate action to cure any past violations of securities laws. Down rounds are bad news; it is generally the common stockholders who take the hit.