Venture debt is like a delicious sandwich that only costs ten cents, but occasionally explodes in your face. If I were running a startup, I don't think I'd ever take it.
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The investors get diluted exactly as much. Investors have to pay for pro-ratas. Logically they're equivalent to separate investments — which they are for new investors in that round.
What percent of the time do your founders participate in pro-ratas? You fund a lot of Rockefellers? Correct me if wrong, but oftentimes the funding documents allow the investors certain rights to participate in follow on rounds that founders don't have.
