Yes exactly. You thought you owned 1%, and all of a sudden you realize you owned 0.9%. And now that's 0.9% at a lower valuation, so you got screwed twice.
How does this actually work - are they actually creating more shares to give to the investors that bought in with this stipulation? Or are these shares coming from some pre-existing pool? I'm admittedly quite unfamiliar with this stuff, so I'm curious how the 'dilution' occurs.