Ownership percentage is how much of a company’s equity a stakeholder holds, expressed as a fraction of total shares on a stated basis—usually basic or fully diluted.

How it works

Basic ownership divides your shares by issued shares only. Fully diluted ownership adds outstanding options, unallocated option pool shares, and sometimes convertible notes or SAFEs as if converted. Term sheets specify which basis applies to investor targets—e.g., a VC seeking 20% post-closing on a fully diluted basis.

After each round, ownership shifts: new investors buy fresh shares; existing holders dilute unless they exercise pro rata rights. Founders track ownership over time in cap table models alongside ownership walk scenarios for future rounds.

Board materials and investor updates should label which basis they use. Mixing basic and fully diluted figures in the same conversation causes misaligned expectations about control thresholds, information rights, and who must approve major transactions under the charter.

Drag-along thresholds often reference minimum ownership percentages. Founders near those cutoffs should understand whether fully diluted counts include unallocated pool and convertible securities.

Why it matters

• Founders: Your percentage at exit determines wealth, but economic outcome also depends on preferences and seniority—not just the headline percent.
• Investors: Funds model ownership against ownership target thresholds needed for fund math and board influence.

Common mistake

Quoting “we own 15%” without saying fully diluted post-money after pool refresh. The same company can show different percentages depending on assumptions.

Related ideas

See ownership target, ownership walk, and liquidation preference waterfalls.