RE:RE:RE:RE:RE:new mathOne article gives the following potential reasons for diluting through PP. Let's hope its #1.
A company might take a dilutive investment round for any number of reasons:
- The new investors are strategically important, and worth offering a low stock price
- The company sold its stock at an unrealistic valuation before, and the new valuation is more reasonable
- The company value has decreased, and this is the best offer the company can find at a time it needs money
- The company has run out of money and is desperate
- The company is negotiating poorly
- There is a kickback scheme, some self-dealing, or other form of impropriety on the part of the company