Are you saying you'd value shares at the same amount with or without a liquidation preference? I'd value the shares with liquidation preference at a premium, no contest.

e.g. 1,000 total shares. You can buy 10% (100 shares) for $10mm with 2x liquidation preference included.

Now say I remove the liquidation preference. Your valuation model doesn't change? Mine certainly does. I'd value the shares lower, causing a lower company valuation for the 10% of the company that's changing hands.

>The reason there are $1B+ valuations is primarily because the VCs believe the ventures will come to dominate major areas of commerce, will typically go public with sky-high valuations, and will continue to grow and dominate even after all that. Investing $100M at $1B valuation is risky but pays hugely if the company later becomes valued at $100B+.

It pays hugely even in a down round with liquidation prefs. I'd invest $100mm at a $1bn valuation with 2x liquidation preference, even if I thought the monetization event would occur at a $300mm valuation (down -70%). I'd still get paid out $200mm for a +100% return. If I didnt have the liquidation preference, I would've lost -70%.