Investors aren't dumb. What does Ivy gain in this trade by just raising a lot of money and running it poorly?

You think he can raise a huge round and just decide to pay himself $20m a year?

Capital is not a moat. There are entire industries (VC, PE, Banks, etc) that are looking to write checks. Nothing would make them happier than to give you money, under the condition that there is significant upside (more VC) or assets (PE, Banks) and you commit to doing the hard work for very little pay.

This is actually how the world works.