Preferred and common stock are not the same thing.

When investors buy shares in an early-stage company, they typically negotiate protective provisions, intended to limit their downside. I am not going to get into why these provisions are necessary, or whether they're fair—opinions range from "must-have" to "tool of oppression"—the point is that most venture term sheets have them. That's no accident; they're there because the protections they provide are valuable.

Common shares don't have these protections; common shares end up buried behind huge liquidation preferences without the pro rata, drag-along, or information rights typical of preferred, and definitely without the ratchets.

I usually treat common as worth 1/3 to 1/2 as much as preferred. The gap is bigger very early on, when there's a lot of risk, or a huge liquidation preference. It gets smaller as things stabilize and the company's value (hopefully) grows well beyond any liquidation preference.

Surprisingly, when people talk about this stuff, the difference between common and preferred often gets lost in the noise. That's a huge mistake.

Situation #1 where I see the distinction lost: reporting about new financing. Say a company has 1 million shares outstanding and investors agree to purchase 100,000 new shares. The shares have a bunch of protective provisions and investors pay $5/share. The press often imputes the preferred share value to the entire business, calling this a "$5 million company"—wrong. Fair-market value of common is only 1/2 to 1/3 as much as preferred, maybe $2/share. So the true value of the business is closer to $2 million than $5 million (quite the difference).

Another way this gets twisted: "we're giving you a $150K equity grant over four years". OK, 30K shares, but at $5—is that $5 the preferred price, or the common? Because the grant is probably on common. "Don't worry about it, they're the same". No they aren't. You're getting the basic model (common) but paying the premium price. That isn't right.

Don't fall for this stuff. Get educated and understand the difference.