“Fully diluted” shares are the total common shares of a company counting all currently issued and outstanding, plus shares that could be issued through the conversion of convertible preferred stock or through the exercise of outstanding options and warrants.
One decision to make when incorporating is “How many shares do you want to authorize?” A common misconception is that the number of authorized shares (which appears in the certificate…
When talking to people about option grants, refer to “fully diluted” and always promise a share amount not just a percentage. I often get asked: “When I tell a new hire…
What is a Down Round? A “down round” is a financing in which a company sells shares of its capital stock at a price per share that is less than…
Very often founders raise the concern about protecting against dilution. Specifically, they are concerned that, as they grow their business and issue stock to investors, employees, and advisors, their shares,…
Not Just a Question for Founders One question I get asked all the time by a team founding a startup is how to allocate stock among the two or three…
Many people think a high(er) valuation is the Holy Grail. Those people are (often) wrong. In pursuit of a high(er) valuation, founders often unwittingly give up valuable ownership percentage points…
We often are asked by clients about common terms for stock or option grants for advisors. Advisors are typically business or technical people that lend their time and expertise to…
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