If a company raises $1mm on a $9mm pre-money valuation, the company is now worth $10mm ($9mm valuation + $1mm raised) and the extra shares correspond to the $1mm raised.
Onwership is diluted on a percentage basis, but the Series B and C investors didn't steal value from previous investors through dilution. There are more shares because there is more money in the company.
> If a company raises $1mm on a $9mm pre-money valuation, the company is now worth $10mm ($9mm valuation + $1mm raised) and the extra shares correspond to the $1mm raised.
No, the company is worth it's last share price x number of shares outstanding. A company is worth what the market will pay for it, not for what some bean counter guesses is the value.
Yes, they didn't "steal" value, they traded cash for present and future potential value.
That cash doesn't just get parked in a bank account (it gets spent) and the company valuation isn't static, it changes based on market perception all the time.
You are thinking in snapshot accounting terms and not in real market valuation terms. Dilution typically causes price per share to fall unless growth is outpacing the dilution significantly.
The concept of "pre-money" and "post-money" valuations exist for precisely this reason. You can read more here: https://www.investopedia.com/ask/answers/difference-between-...
If a company raises $1mm on a $9mm pre-money valuation, the company is now worth $10mm ($9mm valuation + $1mm raised) and the extra shares correspond to the $1mm raised.
Onwership is diluted on a percentage basis, but the Series B and C investors didn't steal value from previous investors through dilution. There are more shares because there is more money in the company.