Simple answer, to guarantee fuck you money. Long answer, most startups will never be Facebook, Google or Twitter. Hence the economically rational founders beli

Simple answer, to guarantee fuck you money. Long answer, most startups will never be Facebook, Google or Twitter. Hence the economically rational founders believe it is better to hold cash than stock in the company. If the founders aren't rational economic actors then any reason will do. This is where passion, and emotion come into play. You will never sell because you aren't a rational economic actor. (It's ok, almost no one is) You mention selling a compnay when it is not making a profit. Selling a company when it is not making a profit is a really good way to get a crap valuation, the point is to sell the company of the apex of belief in its future to produce profit. A company that is shown to have apex'd is not one that most people want to invest in. You're going to have to sell at that point to a 'corporate raider'. Ideally, you want to sell when investors think the growth curve is going to keep on going but it has actually reached a plateau, and you are selling on a multiple of expected profit in the future. Thats pretty much why startups sell. Not all startups are built from passion, some are built to flip.