I would expect there to be a natural discount off the preferred valuation since the common stock doesn’t have the same downside protection. A 20-30% discount would not be at all unusual in my experience.
Saudis need to park tons of cash somewhere. They might be willing to pay a premium for the safety of an American company. A hedge fund may not.
Valuation of a company by using a small sample transaction is always a roughshod thing.
The Venture Deals book is really insightful on this (and general startup financing) subject.
A non employee investing 100k in your company is clearly contributing more than a full time employee being paid in RSUs, so when the company gets liquidated (eg statistics happens) they will get paid back, whereas your employees don’t.
Alternatively, the company might sell enough preferred stock to VCs to give them majority voting rights, and they can then devalue the common stock and sell the company with none of the proceeds going to common stock.
Or your company never goes public, but common stock comes with rules against selling it on private markets, so it can functionally be treated as being worth $0. Or of course (because you can’t sell it) the company can impact clawbacks without you even doing anything wrong.
Of course I’m not saying that all startups do that, just that that can happen (and I believe all of the above have happened).
That’s part of why I will never work at a startup, though not necessarily by choice: many HN people have claimed told me on many occasions that it is unreasonable for me to expect to get fair compensation from a startup. Shrug.
Anyway, for other people who are willing to take the risk of a $0 return from a company selling at a profit, I would strongly recommend having a lawyer look at your contract to verify none of the more egregious failings listed above can happen, and remember that stock compensation is worthless if you cannot sell it.
How do you figure?
So at minimum every "employee" working for a startup is investing (market rate - actual rate) dollars in that startup. That's also not super equivalent because time investments (and standard employment contracts) mean that there is an absolute opportunity cost to working for a startup that does not match a cash investment. Essentially you can invest money in multiple companies at a time, you can't invest time repeatedly.