I think you're asking me to interpret my comment. Apologies if not.
The link I pasted simply had a list of Instagram's financing rounds.
April 5th, 2012, Series B $50m
April 9th, 2012 Purchased by FB, $1b
Several days before being acquired by Facebook, Instagram raised a $50m Series B on a $500m premoney evaluation, which gave investors 10% of the company.
Typically in order to grant 10% worth of preferred stock for a raise, the company has to increase the number of shares. If there were 100 shares prior to the raise, and a had 1, I would have 1/100 or 1%. If there are now 110 shares, and I still have 1, it's now 1/110 or A few days later, the company was sold for $1b.
1/100 * 1b = $10,000,000
1/110 * 1b = $9,090,000
In my contrived example about dilution, with my 1/110%, I lost out ~$1m, and for seemingly no benefit to the company.
Bringing it back to my original comment, employees as a collective, would have lost out significant money, for seemingly no benefit, while Sequoia benefited tremendously.
I should caveat my post:
--This is pure speculation on a number of fronts. Any number of scenarios could be true (even if unlikely)
* IG could have had 10% shares already allocated in reserve for a Series B, and never had to issue more. Employees would still in effect lose out on money, but not because of dilution.
* With that $50m in cash, IG could have paid out hefty bonuses to employees. IIRC at the time of acquisition IG had ~19 people.
* IG could have issued anti-dilution to everyone, keeping relative % near the same.
* The SeriesB may have had to happen in order for Sequoia to agree to the sale.