they mean that the purchase price is discounted. a company with 5M shares outstanding might sell 1M shares for $5 each to Series A investor. Now they have 6M s

they mean that the purchase price is discounted. a company with 5M shares outstanding might sell 1M shares for $5 each to Series A investor. Now they have 6M shares and a "30M valuation". But they're still giving common grants at a $1 strike price because common shares aren't as valuable as preferred shares at this stage. In sufficient liquidity, the gap will close.