Fully Diluted Basis The Real Picture Behind Equity Ownership
Cap tables can deceive and equity isn’t always what it seems.
That’s why seasoned valuers look beyond face value and focus on Fully Diluted Basis (FDB).
?? The Core Principle
It’s not just about how much you own today
It’s about how much you will own after everything converts.
The Fully Diluted Basis reveals the true denominator of ownership by factoring in all convertible instruments: ESOPs, CCPS, CCDs, share warrants, etc.
It is the lens through which valuation must be viewed in cap table-heavy ecosystems especially in startups.
?? Valuation Insights
? Identify the instruments: CCPS, CCDs, ESOPs, SAFEs each alters post-money reality
? Apply waterfall analysis: Who gets what after preference rights and convertibles are exercised
? Factor in timing & triggers: Vesting schedules, milestone-based conversions, IPO-linked terms
? Missteps to Watch
?? Valuing equity without adjusting for FDB leads to inflated ownership illusions
?? Ignoring preference clauses like liquidation preference or anti-dilution
?? Assuming all instruments are equalthey rarely are
?? Takeaway for Analysts & Stakeholders:
In valuations, precision starts with clear visibility.
Fully Diluted Basis isn’t a formality it’s the foundation.
Because equity value isn’t just about what’s on paper it’s about what survives the conversion.
Do the math. Read the terms. Respect the cap table.
Absolutely. We have IBBI-Registered Valuers under all three categories—Land & Building, Plant & Machinery, and Securities/Financial Assets. Our team also includes experienced chartered accountants and engineers.
Yes. We offer remote/desk-based valuation for startups, financial assets, and select use-cases. For physical assets, we usually require on-site verification.
Yes. Client confidentiality is paramount. All data shared is stored securely and not disclosed to any third party without your consent.
