Dilution is extremely common and a lot of this funding stuff comes down to businesses strategy. My example was extreme, but there is tons of gray area for this kinda thing
Ah, if you were exaggerating the numbers to explain the concept, I can see how a more subtle screwing would be nonactionable. I thought you were saying they were that blatant
I think it certainly can be that significant or more. Someone else mentioned Facebook cofounder Eduardo Saverin. At IPO, Zuckerbergs's equity was down to 28% and Eduardo had been diluted down to 2%.
That is a co-founder of a high profile unicorn with continuous growth. Now imagine what can happen to employee # 1000 at a shady middle cap startup struggling to get to market.