Short answer: no. This is what distinguishes an investment in a limited liability business (LLC, Corp) from, well, indentured servitude. I'm assuming their in

Short answer: no. This is what distinguishes an investment in a limited liability business (LLC, Corp) from, well, indentured servitude. I'm assuming their investment in startup #1 was made freely and without deception - they took a risk, like many other investors in many other startups, and it didn't pan out. Had it, they presumably would have enjoyed a return commensurate with the risk. Anyone investing in startups (or any high-risk vehicle) should be aware of... well, risk. Assuming everything was above board, they knew what they were getting into, and you don't owe them anything more than your best efforts in that venture. Now, all that is not to say that you should be a jerk about it. You certainly should recognize the relationship, personal and professional and, say, let them join any investment round in the new startup. Bottom line: if they want to actually get involved in this venture, it wouldn't be out of line to give them an opportunity to do so, perhaps on slightly favorable terms. But if they just want something for nothing - I call shenanigans.