SAFE investors demanding company shutdown. Can they? Market practice?

Question

After changing market dynamics our team decided to pivot the direction of the company. This is happening several months after raising our pre-seed.The investors, who all hold non-converted SAFEs are pushing to return the money and shut the company down. Is this market practice?The founders and the team are excited about the new direction, which is the result of deep first-principle analysis, and ignoring the sunk-cost of the initial direction.The investors are threatening the founders that their reputation in this small market will be destroyed. Even though it seems to me that reputation damage from this behaviour is the other way around. As pre-seed investor you buy deep out of the money call options, and they don't magically turn into puts..Did anyone else have had a similar experience?

ta8645 · Accepted Answer

If the investors don't share your enthusiasm for the new direction, it seems entirely reasonable for them to demand their money be returned. They invested with a belief in the original direction, which the team is now abandoning. It seems unethical to solicit investments for one direction (sell a vision), and then spend the money in a new one (bait and switch)...If the investors believe in the team and the new direction and wish to leave their money invested, that's great; but it shouldn't be forced on them.