Warrant
Definition
A warrant is the right to buy shares at a fixed price in the future, commonly granted to lenders in venture debt deals or partners in commercial agreements.
How it comes up in fundraising
Venture debt warrants typically cover shares worth a small single-digit percentage of the loan, the equity kicker that compensates lender risk.
Frequently asked questions
How do warrants differ from options?
Mechanically similar; warrants are issued to outside parties (lenders, partners) while options compensate employees from the pool.
Do warrants dilute founders?
Yes, when exercised; model outstanding warrants in fully diluted share counts.
Related terms
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