Warrant

The right to buy shares at a set price within a period, sometimes given to investors, lenders, or partners as a sweetener alongside a deal. Similar to an option but issued to outsiders.

Why it matters

Warrants quietly add to future dilution because they become shares when exercised. Founders should track any outstanding warrants, especially from venture debt or partnerships, when modeling the cap table.

For example

A venture-debt lender takes warrants to buy 0.5 percent of the company at the current price as a sweetener alongside the loan.

Related terms

Dilution Venture Debt Cap Table

Go deeper

See how founders actually handle this on Raising your first round, part of the Starting Up hub.

eChai Partner Brands