Tailscale has raised $160M

Equity investments like this don't need to be repaid, so there isn't a legal obligation to repay them. Of course, there is an obligation to maximize shareholder value — but that is totally independent of the dollar amount invested.

When founders raise this much money, it's because there's (1) a lot they want to do and hire for, or (2) they don't want to worry about monetizing the product for a significant period and focus on growth or product development.

GP didn't talk about "repaying" anything. Taking 160M instead of 40M at the same valuation means giving up 4x the shares, and that's going to result in a bigger voice for those investors at the table in making decisions about the future path of the company.

What if they were offered $160mm and Tailscale countered with 4X the valuation, lowering the number of shares by 75%? Similarly, what if they wanted $40mm but the only deal on the table was $160mm due to ownership targets of funds that can actually write $40mm+ checks? It's hard to play these armchair games, even less so when the terms aren't known.

You're right that we don't know all the terms, but $160M raised is not small and it is very reasonable to worry about what level of control will be given up long term because of it.

(3) investors offer the option for founders (and earlier investors) to take money off the table by buying up a percentage of their stake, essentially creating a mini-exit for the founder and earlier investors

That depends on the share classes. Companies with high interest from investors can sometimes get them to accept shares with reduced voting rights.

> Equity investments like this don't need to be repaid

You are saying equity is not bonds.

However investors expect to be repaid in the future with control and exhorbitant interest rates (based on risk). VC invests to make money, but that money comes from future equity rounds or IPO.

If you didn't take the VC money (and the business achieved the same growth without the money) then you'd expect you would have been better off by at least the amount invested (investors don't invest with the expectation of only getting their money back).

If the business doesn't succeed then you are on the hook to pay the debt from your equity via liquidation preferences.

VC payment is expectation statistics, but the investors know that game and invest to make money. That money comes from the current equity owners making less in the future.

Not only the "expectation" but lots of VCs have preference built in that guarantees them huge returns on basically any liquidity event. It's probably not as likely in a Series C like this but 2-3x preference is not unheard of. There are few investment vehicles where for every $1 you put in you're guaranteed to get the first $3 made back first.

409a valuations are made up by independent appraisals, but it’d be quite strange for an investor to agree a share is worth 4 times the appraised value.