Hi Ryan and thanks for your response. The price (the valuation) & the negativity that you’ll create in your reputation when you crush people in a cap table are investment criteria. Just like the team, the traction or the market although with a smaller weight.

→ When confronted with an investment opportunity where the price or the negativity are too high, it’s no automatically killing a deal, it just makes the deal less attractive.

But I think your question is more: how is “negativity” impacting you or the company badly? I can think of these elements:

• the founders can get strongly diluted — even if you issue new ESOP for them they can lose motivation
• the board can be improductive due to the resentment for a while
• your can get the reputation as a VC to be “predatory”. And reputation is really all you’ve got
• the Series A investor can lose faith in the company and disengage
• the equity story looks weird and the question can be raised during future rounds (“why did you raised 5m and then 5m ? the traction was bad?”)
• the founders might not be careful with the money and overspend
• most important: it can be a sign that the founders over-promise and under-deliver

Hope this make you see it from my point of view :)