[quaquaqua1]

If they're willing to give out 5% equity for example, keep in mind that they would barely have any majority equity left one the table left to give in future rounds (100 / 5 = just 20 employees).

Unless of course they dilute your shares in the next round of raising, which they probably will do. So your 5% stake becomes 0.5% when they give themselves another x amount of shares and you get nothing.

Additionally, large investors routinely chastise founders for having "messed up cap tables" where there's lots of individual holders of Class A stock that conceivably should have a say in how the company is run.

Good luck in your hunt!

[hellocs1]

Could they dilute people like that? From 5% to 0.5%? That dilutes everyone else as well though, right (I guess the new shares can be given to the founders so they aren't diluted).

[quaquaqua1]

Exactly, yes. Founders can give themselves 1,000,000 shares to prevent dilution while giving previous equity holders 0.

It's quite an interesting deception if it isn't explained transparently!