[leereeves]

Depending on the terms and the sale price, the investors may have lost money too.

Without liquidation preferences, the founders could earn a profit even if the investors lost money.

(Plus the founders and employees earn salaries, often paid from the invested funds.)

[prostoalex]

Yep, you're right, the lesson out of this is "stick to the common stock for as long as possible". I'm aware of at least one company (5 years running, raised a B round with numbers in mid-eight digits), that still had only common stock floating around.

Unfortunately, the only way to afford that luxury is to not actually need the money, but be in high demand for investors to keep pinging you, and relent at some point with "alright, we don't need money, but if y'all agree to X valuation with common stock, we'll take your money".