Gintivik Systems is offered Rs 150 crore pre-money on a fully diluted basis. What is the price per share, and what changes if the unissued option pool is left out?

Rs 122.95 a share on all 122 lakh fully diluted shares; Rs 131.58 if the 8 lakh unissued pool is left out. The pre-money value is the same Rs 150 crore, so including the pool simply lowers the price, and the new investor's Rs 30 crore buys more shares. The founders and existing holders bear the pool's dilution before the round, which is why they negotiate over what fully diluted includes.

Think of a pizza cut for everyone who has been promised a slice, including two friends who said they might come. If you cut it only for the people at the table, the late arrivals still need slices and everyone's piece shrinks. A fully diluted count includes every share that exists or that someone holds a right to: common, preferred on conversion, granted options, warrants and, on most term sheets, the unissued pool. For Gintivik that is 80, 20, 12, 2 and 8 lakh, 122 lakh in all.

The price rises from Rs 122.95 to Rs 131.58, a difference of Rs 8.63 a share. The new investor's Rs 30 crore buys 24,40,000 shares with the pool counted and 22,80,000 without it, so it owns 16.67% instead of 15.75% after the round. For the founders and early staff, the 80 lakh common shares are worth Rs 98.4 crore at the lower price and Rs 105.3 crore at the higher one. That Rs 6.9 crore gap is the cost to existing holders of creating the pool before the investor arrives.

Because the pool will be used to hire people the company needs after the round, and whoever's percentage absorbs it pays for it. If the pool sits inside the pre-money, the existing holders bear its dilution alone; if it is added after, the new investor shares it. This is sometimes called the option pool shufflePlacing a new or enlarged option pool in the pre-money share count, which lowers the effective price paid by the incoming investor without changing the headline valuation.. The headline Rs 150 crore stays the same either way, which is why founders who look only at the headline miss it. The effective pre-money for existing holders, excluding the pool, is Rs 150 crore less 8 lakh times Rs 122.95, about Rs 140.2 crore.

Two things. First, the size of the pool: an 8 lakh pool should match a hiring plan the founders can name, because an over-sized pool is a price cut dressed as generosity. If the plan needs only 4 lakh, cutting the pool in half lifts the price to about Rs 127.12. Second, the warrants: if their exercise price is far above the round price they may never be exercised, and some term sheets leave such out-of-the-money instruments out of the count. The limitation of any share count is that it is a snapshot; a fully diluted figure agreed today can still move if convertible notes sit outside it, so ask for every instrument by name.