I didn't want to clog the article with an explanation of each of the heuristics I provided, so here it is in the comments.
#1 is pretty self-explanatory.
#2 is the expected value, halved because an awesome startup with every chance of success still fails half the time. If you're swinging for the fences (shooting for IPO), you're way more likely to either fail or get so much preference ahead of the common that you never see anything.
#3 is because everyone underestimates the amount they'll need to raise.
#5 The huge penalty is for two reasons. One, because it's tremendously bad for the common. Two, because it often means something worse: the company's up against a wall, the CEO's a bad negotiator, everyone's expecting the common to be worthless so they have to make it up in preferences, etc.
#6 Again, the direct impact isn't as bad as this makes it out to be, but a CEO who does a good job negotiating preferences is a leading indicator of other good things: s/he knows how to generate demand for the company, has leverage, knows how to squeeze every ounce out of a deal, etc. This is basically a proxy for if the CEO will do well during negotiations to sell the company.
#7 A common-dominated board will tend towards common-friendly exits, and indicates a CEO who does well in negotiations.
Again, this is all guesswork, particularly trying to figure out the all important "will the CEO do a good job selling the company" factor. But I think it's a decent swag.
#1 is pretty self-explanatory.
#2 is the expected value, halved because an awesome startup with every chance of success still fails half the time. If you're swinging for the fences (shooting for IPO), you're way more likely to either fail or get so much preference ahead of the common that you never see anything.
#3 is because everyone underestimates the amount they'll need to raise.
#5 The huge penalty is for two reasons. One, because it's tremendously bad for the common. Two, because it often means something worse: the company's up against a wall, the CEO's a bad negotiator, everyone's expecting the common to be worthless so they have to make it up in preferences, etc.
#6 Again, the direct impact isn't as bad as this makes it out to be, but a CEO who does a good job negotiating preferences is a leading indicator of other good things: s/he knows how to generate demand for the company, has leverage, knows how to squeeze every ounce out of a deal, etc. This is basically a proxy for if the CEO will do well during negotiations to sell the company.
#7 A common-dominated board will tend towards common-friendly exits, and indicates a CEO who does well in negotiations. Again, this is all guesswork, particularly trying to figure out the all important "will the CEO do a good job selling the company" factor. But I think it's a decent swag.