The company is not actually selling "five percent of itself". It's selling shares, and the number of shares in the whole company is a board decision.
In serious financing rounds, the company sells preferred shares which have shareholders agreements attached that might protect investors against dilution, for instance by allowing those shares to convert into common shares at a rate that accounts for any dilution.
In practice, dilution as a simple function of outstanding shares is a fact of life, expected by everyone who invests.
In serious financing rounds, the company sells preferred shares which have shareholders agreements attached that might protect investors against dilution, for instance by allowing those shares to convert into common shares at a rate that accounts for any dilution.
In practice, dilution as a simple function of outstanding shares is a fact of life, expected by everyone who invests.