Remember those startup pivots we used to make fun of on HN? When a pivot happens, it often means the initial idea ran its course, the startup is about to shut down because it's running out of money. However, the team seems to work reasonably well together, at least they get along and seem to have a decent balance of engineers and business people. A new idea comes along, some investors could be interested. But the condition for the investment is to reset the cap table and wipe out the previous investors. From the new investor's point of view, it makes sense: for all practical purposes, this is a brand new startup. From the founders' point of view, they don't really have a choice.

Thanks for that.

If you don't mind a follow up: how is it legal that some corporate restructuring applies differently do different investors, e.g. founders Vs angel? Like if I own 90% and you own 10% can I just go "I've decided that you own 0% now"?

A little something is better than nothing, so the board can dilute if a shutdown is on the horizon.