Perhaps they should be able to sell their shares back to the company? The company would be responsible for raising more money and have some allocation for share buyback.
Some well-run startups make arrangements for this when raising a round. The VC will agree to buy into the round at X dollars per share. They'll also agree to buy up to Y dollars worth of stock from employees who want to sell. VC gets more ownership of the company, and the company doesn't have to give up more ownership. It's overall a good situation. I know that Cloudflare and a few other companies offer this.
Who determines them when you raise money from investors?
That's the market that should determine the value of the shares obviously. The last price fetched on that market. Whether its liquidity is high or low, it's still a viable market, even if it's not the public stock market.
Yep, all of those people stand to gain from setting as low a price as possible given that a liquidity event will reset the share price anyway. Not to mention that any buybacks would hit your run rate, because run rates are about operating cash flows and not valuation numbers (and buybacks are just a way to convert operating cash into equity).
