Investors have access to and get privileged (material non-public) information constantly. Non-board members would have less overall and less complete informatio

Investors have access to and get privileged (material non-public) information constantly. Non-board members would have less overall and less complete information but there would still be some. Having any position introduces unnecessary risk for everyone involved. Sequoia backing out and letting the company keep the money keeps everyone's hands clean and mitigates lawsuits or bad blood from everyone too. Not ideal but probably "cheaper" in many, many ways.