I suspect there are two main reasons: 1) Dilution comes with the game when going the VC route (which founders may or may not have realized ahead of time) and on

I suspect there are two main reasons: 1) Dilution comes with the game when going the VC route (which founders may or may not have realized ahead of time) and once you've started down that path, it's hard to reverse course since you often don't have the cash to buy out investors. So their ownership gets diluted away to obtain funding to keep the lights on and/or with the hopes of cashing out down the line. 2) The plan was always to cash out ASAP. Many startups aren't being built for the long run and more than a few are just attempts at a quick cash grab before investors figure it out so they don't care that they get diluted as long as they get a payday (a.k.a. a 'liquidity event') since that was the plan all along. You are right that once you lose control, you are just an employee and there are many cautionary tales about what can happen from losing control to getting booted out of the company you founded. As a result, there are some companies (notably Google and Facebook) where the founders made sure to retain control. So it's just a matter of priorities and deciding what one is willing to put up with to achieve their objectives.