When they talk about risk they mean capital risk, not personal risk. So someone with 10 million dollars who puts up 1 million has put more capital at risk than

When they talk about risk they mean capital risk, not personal risk. So someone with 10 million dollars who puts up 1 million has put more capital at risk than someone who puts up 100,000 even if that is everything they own. And paying out on personal risk doesn't make sense. Imagine doing a seed round and the share of equity each investor gets is not related to how much they invest but what % of their networth they invest. Also in every startup I've worked for(3) the founders were not rich before starting the company.