Yes, that is an option the existing shareholders have. However, they also have the option of issuing more shares to give to the new investors. Which is what everybody has been trying to explain here. If they have 100k shares but want to take on a new investor and say that investor wants 20%… The shareholders have the option of giving up 20% of their existing shares (20k. Leaving them with 80k) OR they can issue more shares so they don’t have to give up 20k of their shares. If that’s the case, they would issue 25k shares to the new investor bringing the total amount of shares to 125k. 100k still owned by the original shareholders and the newly issued 25k shares to the new investor. 25k shares would then represent 20% of the company and the original 100k shares would be diluted down to 80% of the company.
Yes, that is an option the existing shareholders have. However, they also have the option of issuing more shares to give to the new investors. Which is what everybody has been trying to explain here. If they have 100k shares but want to take on a new investor and say that investor wants 20%… The shareholders have the option of giving up 20% of their existing shares (20k. Leaving them with 80k) OR they can issue more shares so they don’t have to give up 20k of their shares. If that’s the case, they would issue 25k shares to the new investor bringing the total amount of shares to 125k. 100k still owned by the original shareholders and the newly issued 25k shares to the new investor. 25k shares would then represent 20% of the company and the original 100k shares would be diluted down to 80% of the company.