It's unlikely that Dropbox, AirBnb etc. are going to liquidate, so I think you're right that liquidation preferences probably aren't as big a factor in the unic

It's unlikely that Dropbox, AirBnb etc. are going to liquidate, so I think you're right that liquidation preferences probably aren't as big a factor in the unicorn valuations. Most of the investors in the unicorns are late stage funds hoping for an IPO. However, it's not true that the preferred stock directly converts to common stock in all cases. My guess is that almost all of these deals involve ratchets, which are definitely driving up the implied valuations. It also means that if the valuation doesn't keep going up, common stock holders take a bath. Take Box's balance sheet pre-ipo as an example.