When a company raises capital, it’s selling preferred shares, which provide a certain level of security for professional investors. The valuations you read about in the media are the post-money value based on the preferred price, not the common price.
Essentially, if there’s a liquidation, investors who hold preferred shares are first in line to get back their investments. Preferred shares also typically afford the investor some say in the company strategy. Common shareholders don’t have those privileges.
The 409A valuation recognizes that certain benefits simply wouldn’t be recognized by a common shareholder, particularly minority common shareholders. It takes into account all the various rights and privileges that don’t exist with common shares and puts that into a valuation framework. For an early-stage startup especially, there could be a significant difference in value between preferred-share and the common-share options being granted out to employees.