Cap table basics
What is Fully Diluted?
An ownership view that assumes every option, warrant, and convertible has been exercised or converted into common stock.
Fully diluted ownership shows what would happen if every outstanding option, warrant, convertible note, and SAFE were converted into common stock - and the reserved-but-unissued option pool fully granted. It's the most conservative ownership view and the one used in funding-round negotiations. The 'basic' ownership view (only counting issued and outstanding shares) flatters insiders by ignoring future dilution; investors always model fully diluted to know what they're really buying.
Example
- A founder with 5M shares out of 6M issued has 83% basic ownership, but only 50% fully diluted if there's a 4M-share option pool reserved.