These companies don't go public because they are not sustainable yet. This is what VCs are for, they take the risk to lose 100% of their investment.
When now the founder cashes out, he is not in the same boat as the VC any more. The investors have to trust you, because they have almost zero influence in the company.
When you now cash out then they are asking, why? It is a sign that the founder himself doesn't believe in the valuation. When the founder would be sure that his company will be worth billions, he is loosing money by cashing out.
It is simply unfair, because there is a big information asymmetry between the two parties.
There may be exceptions when there is a personal problem, but most of the time a decent salary is enough for everyone.
Anyway, i think this is better than in the new economy. Back then the little guy got screwed and now professional investors.
I don't feel sorry for them, they could do something against it with an endorsement. For an outsider it should just be a warning sign not to be too confident in these startups.
An IPO may be much further down the line and not everybody wants to (or has to) run a public company. 'Going Public' is not just a positive thing, it comes with a large pile of headaches as well and it isn't unusual at all to see a big chunk of money go towards all the duties that come with being a public company.
On top of that you have to weigh every word you say in public.
These companies don't go public because they are not sustainable yet. This is what VCs are for, they take the risk to lose 100% of their investment.
When now the founder cashes out, he is not in the same boat as the VC any more. The investors have to trust you, because they have almost zero influence in the company. When you now cash out then they are asking, why? It is a sign that the founder himself doesn't believe in the valuation. When the founder would be sure that his company will be worth billions, he is loosing money by cashing out. It is simply unfair, because there is a big information asymmetry between the two parties.
There may be exceptions when there is a personal problem, but most of the time a decent salary is enough for everyone.
Anyway, i think this is better than in the new economy. Back then the little guy got screwed and now professional investors. I don't feel sorry for them, they could do something against it with an endorsement. For an outsider it should just be a warning sign not to be too confident in these startups.