I ultimately decided not to join a cofounder who was in a situation analogous to this. An investor owned > 1/3 of the company, but cash was almost gone and the original idea had failed due to TOU issues with a third party. The only option was to pivot entirely, with little money and investors owning a huge chunk. I saw this as unfair, and pushed for a new company - the investors after all had invested in the original idea, and should take some responsibility for its failure.

I would also have agreed to investors putting in more money, combined with issuing additional shares to the founders to keep their stakes the same, or to the investors reducing their stake. The thing is, investors to my knowledge will never be as "gracious" as Arel and Anton.

There is a lot of grey area between pivot and new company where ethics and legalities come into play, and I don't know the right answers. I'd love for someone like pg to expound on this.