My thinking is a little different than most of those who have commented...probably because I'm a bootstrapper.
After reading all of these comments - my thought process goes like this: If the founders output from 11 years ago is worthless, why isn't the investors' money from 11 years ago equally worthless?
If the founders' sweat equity didn't create value, the early VC money didn't either. Should the early VC's lose their investment, or just the founders?
I'm not naive, I understand that these deals are structured this way...I'm just saying that the structure is bullshit (imo).
That's not quite right. It's unclear how much total the VCs put in, at least from the article. But it sounds like they continued to fund the company while the founders' involvement ceased over 10 years ago.
"For the next decade, Bloodhound recovered and slowly grew, raising seven more rounds of financing." <-- if the insiders participated in follow-on rounds they stayed involved all the way through. Once again, that's what seems to be indicated but it isn't spelled out.
After reading all of these comments - my thought process goes like this: If the founders output from 11 years ago is worthless, why isn't the investors' money from 11 years ago equally worthless?
If the founders' sweat equity didn't create value, the early VC money didn't either. Should the early VC's lose their investment, or just the founders?
I'm not naive, I understand that these deals are structured this way...I'm just saying that the structure is bullshit (imo).