THIS is an arguement against SCAM. The owner believes in his product and the potential. Otherwise he would sell 100%.
You do not understand at all how it works. He didn't pay for the 80%, it's an arbitrary percentage. He's actually giving himself 80%, so he can sell it, or keep 80% of the profits, while YOU provide most of the actual capital.
Actually, your math is kinda off here. Me and previous investors together owned 100% and we choose to sell 20% of the shares to the public. This is pretty standard IPO procedure, especially considering that most assets only sell 5% of their shares at IPO. I understand you are not interested in this investment, so I wish you good luck finding an investment opportunity that grasps your interest.