[geophile]

I find your points unconvincing. If a VC is uncomfortable with betting on a startup, maybe he should find another line of work. About your second point: I'm not sure what argument you are making. Yes, of course the VC would like a guarantee. Maybe he would find it easier to sleep at night if he were a loan officer at a bank instead.

VCs are betting money. The founders and early employees are betting their time and foregoing other opportunities. If the thing blows up, the VC gets his investment back. The founders/employees can't recover any part of their investment. I still don't get why a liquidation preference is fair. The VCs are imposing it because they can. Any justification based on fairness is laughable to me.