The downside protection is driven by acquihires from companies like Twitter, Facebook, Groupon, and others which are paying $1M-$3M per engineer.
All these companies seem to be headed for a dose of some very strong medicine though. Without the acquihire safety net I think the seed stage investment game looks a lot less certain.
Of course, all the traditional investment vehicles look even less appealing lately.
I notice many players these days that their entire strategy is based on aqui-hire. Essentially building a "feature company" and trying to grab a user base to piss off the company that "should have the feature anyway". If you ask me, thats a rather narrow game plan and it leaves a lot of risk in case something changes. If the "target company" implements the feature themselves, well, then you either need to pivot or continue in the delusion that the company can stand on its own (hint: It wont because it wasn't ever part of the plan).
All these companies seem to be headed for a dose of some very strong medicine though. Without the acquihire safety net I think the seed stage investment game looks a lot less certain.
Of course, all the traditional investment vehicles look even less appealing lately.