How Valuable Is a Unicorn? Maybe Not as Much as It Claims to Be

If you're interested in learning more, I'd strongly recommend "Venture Capital and the Finance of Innovation" by Andrew Metric and Ayako Yasuda.

I used this book in a VC finance class (taught by a student of the prof in this article, incidentally) and found it very readable and helpful for understanding option valuation. Then again, when I was interviewing, companies wouldn't tell me anything about share pricing or the associated covenants, so it was kind of a wash from an employee perspective.

Why do early investors agree to invest knowing that the future rounds will get preference? Tragedy of the anti-commons is a thing but you'd assume that existing investors would push back against this type of behavior.

A great example of a recently triggered ratchet was in Square's IPO:

https://blogs.wsj.com/digits/2015/11/18/square-pays-93-milli...