Modern finance has a massive blind spot: There is simply no conception of an investment that is expected to decline in value, and consequently no formulation for how to deal with it. The emphasis here is on the expectation of a decline in value. Investments go up and down in value all the time. The point is that no one will knowingly make an investment that they expect to be worth less in the future than it is now, even if there is the risk that might happen. Another way to state it is that people will always try to acquire an investment at the low point. If they expect the price will decline going forward they will hold off on the investment in the hope of buying cheaper in the future. This behaviour basically describes all investors seeking a profit. It applies to stocks, bonds, derivatives, real estate, currency, and commodities.
The idea that an investment is only expected to rise in value holds even for equity investments in startups that are expected to have future losses as operations commence. Pricing of any security (equity included) depends on the expected future payments, discounted to the present value. So long as the market perception of future profits increases, the price an equity investment will rise even if the business is losing money. Thus the issues of startup losses does not interfere with the notion that any investment may increase in value going forward in time, even in the business is expected to lose money.
The main impediment for worker cooperative startups is now easy to describe. In a worker owned firm, the workers in any given period acquire to the profits (or losses) of the business. As the future profits in a worker coop will be owned be the current members at that time, they cannot be owned in the present. Thus the investments of founding members of a worker cooperative must decline in value as startup losses are incurred. And startup losses are expected in almost every new businesses.
Founding members of a worker cooperative must do something completely without precedent in modern finance: make an investment that is expected to decline in value. This action is financially punitive to the founding members and explains the lack of worker coop startups by all but the most ideologically driven. While the issue of a money losing investment is never stated explicitly, the financial consequences of selecting a worker cooperative model are likely apparent to those considering the option. Dealing with investment losses in startups is the central challenge facing the worker cooperative community if the low rate of new worker coop formation is to be overcome. It will not be an easy task.