Agree that Seed is functionally common in a lot of later stage investments, but the 1x liquidation preference at that investment is to protect against fraud (fake founder raises a million dollars and then runs away without attempting to build the company). It is unfortunate that this even happens, but the 1x was an imperfect solution to solving for that risk at the Seed stage. If the VC is actually founder friendly, they will allow the founder to still realize some sort of return in an exit scenario that isn't above the point of indifference.
Agree that Seed is functionally common in a lot of later stage investments, but the 1x liquidation preference at that investment is to protect against fraud (fake founder raises a million dollars and then runs away without attempting to build the company). It is unfortunate that this even happens, but the 1x was an imperfect solution to solving for that risk at the Seed stage. If the VC is actually founder friendly, they will allow the founder to still realize some sort of return in an exit scenario that isn't above the point of indifference.
I addressed this point at the bottom of the post!