It is right, example:

US$100 "company", with one investor owning 20% (US$20) New round of US$50 and the investor uses pro-rata right of 20% . He takes US$50 * 0.2 = US$10 out of the round. Now owns US$30 worth of equity in the US$150 valued company = 20%

Obviously valuations, various investors, various rounds, convertibles, etc. can complicate matters.

Lastly an investor could also only take part of his 20% right and would then get partially diluted.

Hey - by 'pre VC investment' I assume you mean raising a first round of tens or low hundreds of thousands - basically enough to hack out the first version of the product. In this case, yes, you should generate your own term sheet, and make it very reasonable (we give you some guidelines in the article) so as not to deter investors. One reason for this is that due to your stage and the amount you are raising, you are unlikely to have a 'lead' investor in the classical sense. Also - you should definitely raise this round as a convertible note. It is cheaper, faster, and much easier to 'raise as you go'.

I haven't finished reading yet but the page itself is really beautiful. (Except the flying thing on the right, which is annoying).

Nuke the interstitials.