The “Fully Diluted Cap Table,” is a version of the cap table that shows the total number of current outstanding shares for each security, as well as the totals from each convertible security if every convertible security were to be exercised. These convertible securities include stock options, convertible notes, and other shares that are waiting for an exercise event.
The fully diluted cap table is important to review because it gives a true version of the cap table for investors to consider before making an investment decision. This is because if investment decisions are made on the non-diluted cap table, then the investor can be surprised in the actual exit event when their shares get drastically diluted by exercises and conversions. This can cause the company’s share price to plummet significantly if a large number of derivative holders decide to convert.