Founder Equity Dilution

The founders/early investors could have been taking $ off the table so it wasn't all new shares... Just a possibility.

Founders (and early investors) don't necessarily have preference. The thing about founders and possibly key individuals is that they can be taken care of other ways in the earn out, even if their equity ends up hugely devalued. It's one of the ways deals like this can get made, and one way employees can get left holding an empty bag.

It's not uncommon to partially cash out the founder in funding rounds. If the founder gets some cash, ey is less likely to push for an earlier exit. Eir goals are more aligned with the VCs, looking for a larger exit.

Does someone know what the equity of the founders looks like in these ultra-funded companies? Do they still own a significant part of their business? Is it more like 5%? 10%? 30%? 50%? (doubt it)

How come the founders have so little equity?

It's super rare that founder shares don't vest. YC would have advised it.

Doesn't this de-incentivize founders since they're giving up their most valuable asset, their equity?

This is bass ackwards. The founders get diluted more than anyone else. Every time you issue a new tranche of equity, the existing holders take dilution proportional to the share they currently own.If the original founders each hold 40%, and some employee holds 1%, after 50% dilution (common after the first couple rounds) the founders are down to 20% and the employee is down to 0.5%. It's possible to bump a star employee up by 0.5% to counter dilution. It is impossible to bump the founde

It should work, you can enforce this. You can see that some VCs even encourage founders to offload some of their stocks because it "destresses" the founder (a little bit of money in the bank= more zen) from worrying about money too much to refocus on the business instead.

Founders are subject to vesting like other employees. Sometimes VCs will require a new vesting period when investing. I suspect he lost any unvested shares.