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This arrangement is bizarre.

The VC business model is predicated on extreme growth. The last thing you would want to do is siphon dividends out vs reinvesting into growth.

They must have preyed on newbie founders, dangling large valuations. Oh the fees? Well you will make it big and it will be a drop in the bucket!

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I suspect initially the fund was earnestly trying to make some huge exits, and the incubator was really a support for that. But as time went on it looked less and less like a big exit was in the cards. A stream of money to fund a lavish life was right there for the taking, and perhaps it's human nature to shift the priority to keeping the good times going.

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