Equity, Ownership & Dilution
How shares work, how ownership gets divided, and how it changes over time.
24 terms
Beginner
Cap Table
A spreadsheet tracking every shareholder, their share counts, and ownership percentages.
Capitalization
The total value and structure of a company's equity and debt financing.
Common Stock
The basic share type held by founders and employees, with no special investor protections.
Dilution
The reduction in your ownership percentage when a company issues new shares.
Equity
An ownership stake in a company, typically in the form of stock or stock options.
Option Pool
A block of shares reserved for granting stock options and RSUs to employees.
Ownership Percentage
Your shares divided by total fully diluted shares, expressed as a percent of the company you own.
Unvested Shares
Shares or options you have been granted but have not yet earned through vesting.
Vested Shares
Shares or options you have earned through time-based or milestone-based vesting.
Intermediate
Anti-Dilution
Investor protections that adjust their share price downward if a down round occurs.
Authorized Shares
The maximum number of shares a company is legally allowed to issue, set in its charter.
Dilution Modeling
Projecting future ownership percentages based on expected fundraising rounds and pool expansions.
Founder's Shares
Common shares issued to founders at incorporation, typically at a fraction of a penny each.
Fully Diluted Shares
The total share count including all issued shares, options, RSUs, and convertible instruments.
Issued Shares
Shares that have actually been distributed to shareholders, from the authorized share pool.
Outstanding Shares
Shares currently held by all shareholders, excluding treasury shares repurchased by the company.
Preferred Stock
Shares with special rights (liquidation preferences, anti-dilution) held by investors.
Pro Forma Cap Table
A projected cap table showing ownership after a proposed transaction like a funding round.
Pro Rata Rights
An investor's right to invest in future rounds to maintain their ownership percentage.
Share Class
A category of stock with specific rights; common shares and each series of preferred are separate classes.
Stock Split
Dividing existing shares into more shares at a proportionally lower price, with no change in total value.
Advanced
Conversion Ratio
The number of common shares each preferred share converts into, initially 1:1 but adjustable.
Recapitalization
A major restructuring of a company's equity and debt, often resetting ownership after a crisis.
Reverse Stock Split
Combining multiple shares into fewer shares at a higher price, often to meet exchange listing requirements.
Other categories
Definitions are intended as plain-English educational summaries. Not legal, tax, or investment advice.