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Some other terms' posts
So it is not surprising that entrepreneurs hate this provision and fight about it every time. And like most terms, VCs have been abusing it for years by asking for excessive option pools making the provision hated more than it needs to be. The first point I'll make is that VCs should be upfront about this provision and the fact that it is simply about price.
Valuation and Option Pool
What happened to change my mind is I saw entrepreneurs lose everything even though they had made VCs a lot of money. Most of the time that happened when they took companies public too early, the VCs cashed out, the entrepreneurs couldn't, they ran out of money, and had to sell cheap or in some cases the companies went bankrupt. That taught me that often the entrepreneurs have to hang in there longer than the VCs in order to get a good exit. If that is the case, then it is entirely reasonable to offer them some early liquidity in return.
Founder Liquidity
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