Comprehensive view of all share claims
- All shares currently issued to founders, employees and investors
- All options granted but not yet exercised
- The unallocated portion of any approved option pool
- Warrants outstanding
- Convertible loan notes or SAFEs, converted at their agreed terms
Accurate assessment of investor ownership stakes
A shareholder who owns 20% of issued shares might actually own less once the option pool and convertibles are counted, because those instruments will eventually turn into real shares. Investors always negotiate their stake on a fully diluted basis, which is why cap table management treats the pool as core data rather than an afterthought.
For example, if a company has 900,000 issued shares and a 100,000 share unallocated option pool, an investor who buys shares equal to 10% of the 900,000 issued figure (90,000 shares) actually holds only 9.0% on a fully diluted basis of 1,000,000 total shares, the same dilution effect that shows up whenever new shares are created.
Estimating conversion impact of SAFEs and notes
A SAFE or convertible loan note does not create shares immediately, but it will convert into shares at a future round, usually at a discount to the round price or subject to a valuation cap. Because the number of shares it converts into is not fixed until conversion, many cap tables show it as an estimated range until the round happens, similar to how an option pool is sized before every grant is allocated.
Ignoring outstanding convertibles when calculating fully diluted ownership is a common cause of unpleasant surprises for founders at the next funding round, when the convertibles finally convert and dilute everyone at once.
Total fully diluted share count breakdown
| Component | Shares |
|---|---|
| Issued ordinary shares | 700,000 |
| Issued preferred shares | 150,000 |
| Outstanding options | 50,000 |
| Unallocated option pool | 100,000 |
| Fully diluted total | 1,000,000 |
Fully diluted counting, explained
- Is fully diluted the same as fully vested?
- No. Fully diluted counts all shares as if every option and convertible converted today, regardless of vesting status. Vesting is a separate concept about when someone actually earns their shares.
- Should the unallocated option pool count in fully diluted totals?
- Yes, because it represents shares reserved for future grants and will dilute existing holders once issued, so investors always include it.
General information for founders, not legal or tax advice. Thresholds and rates change, so confirm the current position with an adviser in the relevant country before granting.