A startup founder can end up owning 50M worth of stock in an unprofitable company. What happens then if the company is worth 1M by the time it's time to pay the tax?
In my country, there are people who's had to declare personal bankruptcy from this situation.
That’s always going to be country specific. Generally, anyone that’s failed to diversify their investment so a 98% drop in some asset doesn’t result in them losing 90+% of their fortune has already failed.
Also, be cautious about how early investments may artificially inflate the value of the company. Convertible debt is one way around that issue.
In my country, there are people who's had to declare personal bankruptcy from this situation.