This is a pretty common scenario when a venture funded company doesn't reach a valuation that exceeds the various preferences accumulated in investment rounds.

This is a pretty common scenario when a venture funded company doesn't reach a valuation that exceeds the various preferences accumulated in investment rounds. The company is ultimately sold, all of the sales proceeds are taken by the preferred shareholders, who carve out set-asides for founders and senior management to keep them onboard and not scare the acquirer off with internal strife.