> The first reason is that you want he founders to be focused on the company, and not struggling to make ends meet. That way they can make long term decisions.

> The first reason is that you want he founders to be focused on the company, and not struggling to make ends meet. That way they can make long term decisions. If a company makes it beyond the seed stage, it should be capitalized well enough to allow the founders to take a reasonable salary. If there are any founders employed at venture-backed startups struggling to make ends meet, I think it's safe to say the vast majority of them are not struggling because they're not being paid well enough. > Secondly, every round the founders lose more and more control. They should be compensated for this. Why? If you want to maximize control, build a business that doesn't need to sell equity to raise capital. Or build such a great business that you can raise large sums of capital without having to sell much equity. Incidentally, when founders cash out their shares, they're only hastening the loss of control, especially if this is done early when the company's valuation is lower. > One of the big problems with venture capital these days (and the reason I won't take it anymore) is that it disrespects the founders by demanding liquidation preferences for the VCs. As if the VCs who merely put up other people's money should have rights superior to the people who literally put part of their life into the company. That's not right. All shares should be equal, and if not, the founders should at least be respected. This is silly. You're not going to raise millions of dollars from professional investors who have fiduciary duties to their limited partners without said investors demanding reasonable protections. Period. If a founder is worried about a 1x preference, which is fairly standard, it suggests the founder is not confident about the company's prospects, at least as far as investor expectations are concerned. For example, if a founder raises $5 million round at $15 million pre and is worried about a 1x preference, one would have to question whether the founder really believes the company is actually going to be able to deliver the type of growth his or her investors expect. If an investor demands a 2x or greater preference in this market, it probably means the company is not in a good position because nobody competing for a deal is likely to demand more than a 1x preference today. > Thirdly, too often I've seen VCs force founders to revest shares. But the value of those shares was already earned. The founder incentive to do well comes from increasing the value of the shares... and revesting the shares denies the founders crucial voting rights that they have earned already. (And makes it that much easier for the VCs to force a founder out, which is usually a bad idea in my experience.) Revesting is negotiable and if you set up a reasonable vesting schedule when you form your company, chances are you'll be able to avoid this issue entirely. A lot of founder revesting issues arise because the founders purchased their shares for virtually nothing with no restrictions attached when they formed the company.