It's also an "open secret" that investors lose their investment when the founder fails. In addition, more than 90% of VCs are money losers, overall. Founders are taking the risk with their time, investors are taking risk with their money.
"Capitalism!"
It's irrelevant to some degree if this growth is real (driven by a better product), or inflated (by offering steep discounts, ads, marketing, etc).
It looks good on paper, and allows raising the next round. This is of course an order of magnitude bigger and demands even more growth. VCs look like geniuses in that case. Value of fund goes up, fees go up. Until they don't.