As far as I understand, when the next round happens, the startup emits new shares that are sold to new investors under newly negotiated valuation.
Does this lead to the previous investor's shares dilution, as they are not able to participate in the round with the new valuation?
Or do the next investors buy out the angel's share with cash?
Or are there some other shareholder agreement statements or schemes that prevent the dilution? If yes, what are the most plain words that can describe them?
I understand that every case is unique and an angel should consult with an attorney. I am interested in how it generally happens in places where the angel and venture investing system is the most developed, such as Silicon Valley. Sort of best practice.