The problem is the legal, but unethical terms that enriched a few stock holders/founders as the expense of everyone else.
I’ve been involved in several startups, not all that have gone well. With the “down rounds” and less-than-stellar exits, the one thing in common was that everyone was treated equally.
When employees didn’t make much on the stock options, the executives didn’t either. There wasn’t one group getting wealthy while the others were left high and dry.
There is certainly risk with any venture or investor financed company, but one expects to be treated fairly, not exploited for a few to gain on the backs of everyone else.