Fully Diluted Shares
Definition
Fully diluted shares count all shares outstanding plus everything convertible into shares: options (granted and often the unallocated pool), warrants, SAFEs, and notes.
How it comes up in fundraising
Valuations and ownership percentages are negotiated on a fully diluted basis, so a “10 percent” stake means 10 percent after all instruments convert.
Frequently asked questions
Why do investors insist on fully diluted math?
It prevents ownership from being quietly eroded by instruments that convert later; everyone negotiates against the same complete denominator.
Does the unallocated option pool count?
Usually yes in venture negotiations, which is why pool expansions before a round effectively come out of founder ownership.
Related terms
Put this term to work
Definitions win negotiations only when you are in one. Find the investors who fund your stage and start the conversation.
Browse the investor database