[relaunched]

It's a hard reality, but imagine you are the one re-capitalizing this venture. They have a team, no customer, no product, but a new idea they want to pursue. There are a lot of early teams with ideas in search of money that you could invest in. This particular team comes with 10% dead weight on the cap table, which essentially means everyone else is getting diluted out of the gate, by someone that will bring no future value.

That makes this investment worse than anything else you could invest in, by a factor of that non active founder.

[ipaddr]

Folding and restarting makes more sense in this situation. The fact that one founder wants to keep the existing structure because of the legitimacy the co-founder provided means there is value still being provided by the co-founder.