Startups need to respect the laws of retail physics
If venture capitalists want to give you lots of money at ridiculous valuations I don&#x27;t see why its incumbent upon the startup to create a worse deal for themselves.  At the end of the day its the venture capitalists that will lose.<p>However the VCs aren&#x27;t stupid, they understand this which is why most insist upon liquidation preference.  Ultimately the high valuations will end up working against the founder because these unrealistic expectations mean that those with preference will win and the rest will get nothing.<p>When signing a deal you really need to consider what happens at every outcome.  Not just the binary choices of wild success and abject failure.  You can bet your adversaries in the negotiation have already done this.