It's probably somewhere in the middle. In any event, entrepreneurs and later investors are clearly getting the short end of the stick here. I can imagine the conversations that lead to these capital returns..."you're failing....if you don't return capital now, you'll never get another investment from a major firm again" (that's if the investors don't negotiate enough board seats/voting rights to just return it without the founder's consent).
Either that or the valuation is inflated artificially 5 fold.