In some countries, if your startup fails you're legally obliged to pay back all money that was invested in it, and you won't be able to start another until you've done so.
It's not a loan from a bank. It's an investment, and the nature of investments are that some fail.
It's pretty wild that founders would need to pay back this money. That would have a massive drag on any risk taking or innovation.
The entire point of venture capital and similar funding mechanisms is that in exchange for a potential massive return on investment, funders are willing to lose everything.
