Yes, there can be limits in the contract, making it not possible to sell for less than X in the next Y years. So if you want to do that, you then need to convince your investors this is the best deal they will get.
Also, the investor also often have liquidity preferences. So if they invested at a valuation at $100, and you want to sell at $50, they might get all their money back before previous investors and yourself get a single cent. Then it might not be worth it for you to sell at all.
Even if there isn't a contractual limit, I think this is a pretty easy logic problem for an engineer (such as myself):
If a stock costs $10, and I spend $100 to buy 10 shares of that stock, I don't want to sell that stock if it's worth less than $10.
Will I consider taking the loss? Maybe... but I will probably be unhappy with it, so I will do everything in my power to wait to sell until the stock is worth more than $10 again.
