I don't think you're really justifying why employees and investors ought to have different terms. To the extend that investors need extra compensation, they can always be compensated with additional shares, regardless of those shares' terms.
I think in an ideal world, investors would normally receive common stock (and more of it), but there are some practical reasons why that isn't the case:
- Selling preferred stock lets a company declare a more lofty valuation.
- If a company sold common stock to investors, they'd have to use the more realistic fundraising valuation when pricing options, rather than a (typically) more conservative 409a price.
- Employees tend to not have access to the cap table, or not understand it, so there's not much disadvantage to giving them less favorable terms.
The basic reason that investor capital has a liquidation preference is that if it didn't, the founders could raise $X million on day N, then since they hold the majority of voting rights, declare bankruptcy on day N+1, and split the majority of the invested capital among each other.
There are ways around this, such as giving the investor a veto on bankruptcies and reorganizations, but the time-honored solution is a 1x liquidation preference where the investor gets their capital back in a bankruptcy.
I'd go with Occam's razor on this - investors always want preferred, the more preferences the merrier, companies always want to sell common, and if they could go sub-common (by stripping the shares of voting rights or dividend participation) they would.
Whoever has the most leverage in the transaction tends to win.
I think in an ideal world, investors would normally receive common stock (and more of it), but there are some practical reasons why that isn't the case:
- Selling preferred stock lets a company declare a more lofty valuation.
- If a company sold common stock to investors, they'd have to use the more realistic fundraising valuation when pricing options, rather than a (typically) more conservative 409a price.
- Employees tend to not have access to the cap table, or not understand it, so there's not much disadvantage to giving them less favorable terms.