Ex : if i invested 10k $ , if the priced round happens after one year , my investment would be evaluated as 10.5 -10.6 k , rather than the original 10k and also if the [[valuation of the company]] is at 1 M $ , for me it would be valuated only at 75k $ .
Limitation :
This wouldn’t compensate enough for the risk , the early investor took , if there is a very high valuation and if the initial investment was small (comparitively)