One of the things I absolutely adore about the VC model is the endless supply of supposed reasons why preferred stock should, especially if participating, pretty much guarantee payback while common is naturally less valuable. I mean, those common holders: all they’re doing is putting in years of their lives! That counts for zilch.
The VC arguments about the merits of preferred stock might be fractionally more credible if VCs were not so adept at ensuring they get paid handsomely regardless of outcome. If a VC firm raises a $1 billion fund, the 2% carry ensures fat salaries regardless of what happens to the portfolio. And if even just one portfolio company has a nice exit, the 20% the VCs return to themselves likewise ensures a lot of very nice mansions can be acquired in Hawaii.
So the VCs lecture the keyboard serfs on “fairness” (e.g. foregoing salary in return for largely illusory potential future gains) while ensuring that as venture folk they personally have a win-win-win scenario going at all times.