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> Four others that raised money but with painful recapitalizations that effectively wiped out early shareholders

Does someone have a recommendation on reading that goes deeper on this point? What enables later investors to do this? What can early investors do to protect their investment?

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There are a few different ways this can happen. It has to do with seniority of liquidation preferences -- basically, if you recap or you exit for less than your highest valuation, who gets paid first? This blog post is a pretty great summary of what can happen: https://heidiroizen.tumblr.com/post/118473647305/how-to-buil...

Read the other article in the series that has more depth on this:

https://www.halletecco.com/blog/angel-investing-part-iii#:~:...

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