[ares2012]

Investors will see it as an issue because it limits the room on the cap table for future hires. Startup companies take a long time to build so that 10% will make it tough to hire and build a team over 7 years because there is only so much equity to go around. Investors have minimum ownership levels, hiring requires a certain amount of equity so there can be a motivation problem among the remaining team/founders.

Investors will likely push for a recapitalization to reset the cap table and remove the outstanding equity all together.

[JonFish85]

"Startup companies take a long time to build so that 10% will make it tough to hire and build a team over 7 years because there is only so much equity to go around."

Is it still generally the case that the entirety of the options pool for employees is well under 10% (more like 5%)? If that's the case, I get that it may be limiting for the investors, but hiring & building a team is pretty "cheap" from an options standpoint I believe.