A startup’s share count depends on which number you mean. Authorized shares are the maximum the company can issue. Outstanding shares are the ones actually issued. Fully diluted shares add the full option pool and any warrants. Any time you express ownership as a percentage, say which count you’re using.
Key takeaways
- Authorized shares are a ceiling, not ownership.
- Outstanding shares are what has actually been issued.
- Fully diluted shares are outstanding shares plus the full option pool and warrants.
- For offers, use an exact share count rather than a percentage.
How do the three counts compare?
| What it counts | Example | |
| Authorized | The maximum the certificate of incorporation allows | 10,000,000 |
| Outstanding | Shares actually issued | 8,000,000 |
| Fully diluted | Outstanding shares, plus the full option pool (granted and ungranted), plus warrants | 9,000,000 |
What are authorized shares?
The maximum number of shares the company can issue, set in the certificate of incorporation. Authorized but unissued shares aren’t owned by anyone; they’re simply available to issue. Increasing the number requires a charter amendment approved by the board and the stockholders.
What are outstanding shares?
Every share of every class actually issued, including unvested restricted stock. Outstanding shares don’t include options, warrants, SAFEs or convertible notes.
What are fully diluted shares?
Outstanding shares, plus the full option pool (granted and ungranted), plus warrants. SAFEs and convertible notes aren’t counted, because they convert into new shares in a later priced round.
Which number should I use?
Use fully diluted shares for ownership percentages in offers and investor discussions, with a date. Better still, use an exact share count. See Exact Share Numbers, Not Percentages.
Related: Exact Share Numbers · Equity Dilution · Employee Option Pool · Cap Table Management
