Fully diluted versus outstanding
Outstanding counts what exists; fully diluted counts what could. The same Northwind table, both ways.
"Outstanding" counts shares that exist. Fully diluted counts shares that exist or could: every option granted, the unissued pool, and each SAFE or note as if it had converted. Investors price rounds on fully diluted shares, so a founder who quotes ownership on outstanding shares is quoting a bigger number than the one in the term sheet.
Where this lesson's rules come from
The sources behind this lesson's requirements, by kind. Background reading explains; it is never the authority for a rule. Anything marked as a convention is ours, not the rule-maker's.
- Background reading — not an authority
- Y Combinator, Post-Money SAFE (Valuation Cap, no Discount), §2 (opens in a new tab)The Safe Price, and what Company Capitalization countsFree to read
- Wikipedia, “Capitalization table” (opens in a new tab)The cap table — backgroundFree to read
The words this page teaches
Each links to its glossary definition, which also names the authority behind it and the components that render it.
- Fully dilutedCounting every share that exists or could: issued stock, options granted, the unissued option pool and convertible securities as converted. The basis a SAFE's Company Capitalization, a priced round's price per share and most ownership percentages are quoted on
- Cap tableThe register of who owns what in a company — every share issued, every option granted, the unissued pool and every SAFE or note that will become shares — shown as share counts and as percentages, issued and fully diluted. It must agree with the stock ledger, the board consents and the booksConvention
- Option poolShares the board reserves under a stockholder-approved equity plan for future grants of options and other awards. Granted options and the unissued remainder both count in fully diluted shares