In the 90's, people cashed out by taking their companies public. Now, for a variety of reasons including the new burden of complying with Sarbanes-Oxley, founders are waiting much longer to go public. So they are cashing out by selling some of their founder shares to private investors.
This is in the interests of the investors because it aligns their interests with those of the founders. Say you started a company, it's kicking ass, and you face a choice. Plan A is a $100MM acquisition offer. But there's also Plan B, an ambitious expansion. Plan B gives you a 50% chance of $1B in two years, and a 50% chance of failure. If you had no assets before you started the company, the only sane thing to do is to sell out. (Not that I am suggesting that sanity should always rule the day.) But your investors probably prefer plan B. If they let you cash out $5MM or $10MM of your stock, then they make your risk tolerance more like theirs, and you can both get excited about Plan B -- which, assuming your startup is actually producing something of value, is better for the world, too.
And it's probably also better for the investing public that tech startups don't make it to IPO until they are a bit more fully baked.