Generally this is not true - the "risk" taken by these people is very small, because of how wealthy they or their parents are.

If I had $1M and lost it, I would be devastated.

If I had $1B and lost $1M, it would be a rounding error.

I don't have any money, so how do I even get to $1M? And neither does my parents.

We're not talking about that kind of risk. It's just a synonym for the amount somebody is going to lose if the company fails, regardless of what the amount means to them personally.

VC invests $1M in a startup, they are risking $1M. You just work at a company, get paid every month, and don't buy any stock, you are risking $0. That's all.

If the company does well and the VC makes $5M back, it probably won't mean much to them, either. But that's how the contract was written, because the company needed that $1M.

The risk of investing time in a startup is in the lost opportunities (ie. opportunity cost). It can be dollarized with discounted cash flow as an approximation. Could you earn more at a large company than at a startup? What are your options? Do you even have better options? How high and how likely must the "lottery ticket payout" be to break even? And don't forget the time value of money: How much could you gain by investing the excess money during those years?

Time is the most precious resource we have. It's per-se underrated whenever it's dollarized. Unfortunately, most don't have a choice than to sell their time for money. Thus, it's even more important to spend time wisely.

Thinking, you don't risk anything because you don't spend money on a startup is wishful thinking. Or more likely: It's just a good story VCs and founders like to tell, because it's in their interest.

There are opportunity costs no matter which job you take, from startup to FAANG. So of course this is assuming that you joined the startup after carefully considering other employment options, as you absolutely should. No disagreement there. :)

Yes I understand this. My point is, what “risk” are the investor class actually taking? Not much, because they have enough to hedge their bets many times over, while a salaried employee can’t even be in the game. They simply can’t afford one measly chip.