Newbie question: what's preventing the downround? SB's (and other investors') terms ("others shouldn't pay less to get more!") or founder ego ("I'm not a successful unicorn shepherd if we take a downround"), or something else?
Guess who the guys who gets hosed are? Founders and employees of the company who have options. Suddenly you and your co-workers have almost worthless shares in a company that isn't doing well. If you're at the start up for the potential upside it's at that point you really need to look at moving on. So suddenly a down-round isn't just a down-round it's also a "lose all the good employees" round.