why does everyone always act like the money can only go one direction in. If you have someone in category 3 toss them out of the cap table - get someone to buy out their positions ASAP.
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I disagree - I see the only reason it does not exist is historical norms. Lots of things in the modern term sheet are complex - and nothing makes this kind of term or transaction impossible here.
Any company that hits escape velocity could/would force buybacks of shares (financed with revenue or debt) from early investors. It would decimate venture returns, which are driven by a few massively successful companies. Agreeing to this structure would be self-destructive.
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But there is plenty of capital standing by to get in on startups right now. So the VC old boys club where they can do two deals a year and sail 60 days a summer gets destroyed and managers have to actually provide value to get all that glorious upside? Sounds great
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The public would love to invest in startup companies before they become unicorns again...
End of conversation
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