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It happens regularly and it's called a re-up http://christophjanz.blogspot.com/2018/11/founders-please-dont-allow-anyone-to.html http://christophjanz.blogspot.c

• cj 6y ago
  The article is from 2018, and reads: > In the last year, we have seen, on more than one occasion, a behavior among later-stage VCs that we’ve rarely observed in the years before Which seems to imply it's not a common practice. As I mentioned, it's 100% theoretically possible to do it, but the percent of companies that actually do it is very low. It would be not only bad for early employees, but also bad for early investors - it would hurt the founders reputation among their early investors (and employees) which most founders wouldn't be willing to do.
  • rutthenut 6y ago
    Your points about why this is bad are entirely correct. But founders with shareholding may (do) work with later investors to their joint benefit, screwing over other early shareholders or investors. With VC money holding shares already, that is not so likely to happen - unless it is the VC buying-in more equity. However, smaller enterprises with startup beginnings are very likely to follow this pattern, as later investors (and perhaps greedy founders) do not care about those that came before.
• mizzao 6y ago
  Great article! I'd heard about this maneuver only in theory before and never saw it written up. Sounds like a bit of a moral hazard / principal agent problem for founders!