Most seed fund investment is in the form of a convertible note these days ... it's a loan with the option to convert to equity later. Consequently VCs can ask for the debt to be repaid (within the terms of the note). Obviously they'll only get back what's left in the bank and assets but the idea that they can't ask for it back isn't really true.
Right, and that would kill the company, but a VC is probably more likely to kill a company that's slowly running out of its runway than a company that's doing something out of the ordinary to survive and get back on track.
