I take it you mean the equity funding. They obtain money at no...

I take it you mean the equity funding. They obtain money at no interest from a fund manager, who at a later date converts the loans into equity. The equity is issued by the company therefore reducing or diluting everbody elses shares ( eg if the company had 100 shares on issue, and they then issue 10 more shares, a person who originally owned 100 shares or 10 % of the company, would still own the 10 shares ,but only own the 9.095 of the company.)
As far as i can see this means we all have to take a hit for past bad managment. if things go well and the money is used to expand the value of the compant, we are better of, if not we are probably no worse of than we are today.