Presumably at some point in the future, the company will make money and pay dividends. The 409A valuation is supposed to be an approximation of the valuation b

Presumably at some point in the future, the company will make money and pay dividends. The 409A valuation is supposed to be an approximation of the valuation based on the likelihood of future dividends (I believe using Generally Accepted Accounting Principles). For a startup, this valuations is almost always a lot less than the top-line valuation used in the press / Series A investments.