It helps a lot with recruiting. For an engineer with a choice of where to work and with disparate total compensation across companies, they may be more likely t

It helps a lot with recruiting. For an engineer with a choice of where to work and with disparate total compensation across companies, they may be more likely to choose a company that can maximize potential total comp, and a startup with VC funding increases their chances of winning that IPO lottery ticket. Also, it is not quite a loan or debt, what happens is you are exchanging your equity for a money infusion to help you grow. If the startup fails, no money has to be repaid, the VC firm loses money. But if the startup succeeds, you succeed, but so does the VC, it becomes a win-win for both parties.