Consider the rash of multiple liquidation preferences we've seen over the past 2 years. Are VCs hurting more now than in 2007? Not especially, since the money they're investing has been pledged years ago, mostly before the liquidity crisis. They're offering these awful terms because a lot of people are unemployed and desperate to get a paying job of any kind, so they have leverage. When the alternative to starting up is a $100k/year Google job, the "involuntary entrepreneurs" will vanish and terms like multiple liquidation preference and participating preferred will go back into the tarpit where they belong.
Consider the rash of multiple liquidation preferences we've seen over the past 2 years. Are VCs hurting more now than in 2007? Not especially, since the money they're investing has been pledged years ago, mostly before the liquidity crisis. They're offering these awful terms because a lot of people are unemployed and desperate to get a paying job of any kind, so they have leverage. When the alternative to starting up is a $100k/year Google job, the "involuntary entrepreneurs" will vanish and terms like multiple liquidation preference and participating preferred will go back into the tarpit where they belong.