The word "preferred" in "preferred stock" indicates that owners of the preferred stock are entitled to get back the full amount of principal invested plus cumulative dividends (together, they are often called the "liquidation preference") before the owners of common stock can see a dime. People who own
options to buy common stock are even further behind on the line: They won't see a dime unless there are proceeds allocated to common shareholders and the proceeds per share exceed the exercise price of the options.
That's how the capital structure of VC-backed companies work, by design.
