I think they also bought common stock? During private fundraising, investor (vs founder) stock generally has preferred rights when the company is sold and/or l

I think they also bought common stock? During private fundraising, investor (vs founder) stock generally has preferred rights when the company is sold and/or liquidated. There might also be restrictions on who and how someone can sell their common shares. This depends on the investors and the terms that were negotiated during fundraising. So common stock generally is sold at a discount because it doesn't have any of these protections, and it's basically last in line to receive any payout. However during IPO, often preferred stock converts into normal common stock so that it can be sold to Joe Smuck (or their pension fund institutional) investor. Hence it's an arbitrage play; you purchase common at say a 30% discount in a late round and then sell it on the market for full price.