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> the founders have a way to realize their equity as well. That's the part I don't get. Wouldn't they keep the profits anyway if they just didn't sell?

• giaour 7y ago
  If they didn't sell, they would keep all future profits but not exchange the underlying equity for cash.
  • icebraining 7y ago
    But they aren't exchanging it for cash, they are exchanging it for future profits ("They’ll pay us (...) from the company’s future profits") - which they would get anyway. No?
    • giaour 7y ago
      I may have been reading it wrong, but my understanding was that they would be exchanging their equity for a fixed dollar amount, to be paid from future profits. If they didn't sell, they would continue to receive a fixed percentage of profits. Essentially, they're converting their equity into a loan.