> In effect, the investors are trapped due to lack of liquidity, not because the investment is bad, but because it wasn't a huge success, just a minor one. No,

> In effect, the investors are trapped due to lack of liquidity, not because the investment is bad, but because it wasn't a huge success, just a minor one. No, actually, the investors are trapped because they made a failed investment. There's no trend here. Nearly every business formed in history provided no liquidity for the equity owners. That's fine for the founder, if their goal is a lifestyle business. Of course for a venture investor, this "minor success" is a failed investment. This is why seed notes require repayment after a certain period, and why preferred shareholders can demand a dividend. Unless the founders goal is a lifestyle business, they should shut it down and try something better.