What is a warrant in venture financing?

A warrant is a right to buy a company's shares at a fixed price for a set period — an option issued by the company itself. In venture, warrants most often appear as 'kickers' attached to venture debt or strategic partnerships, compensating the counterparty with upside without an immediate share issuance.

Warrant coverage is quoted as a percentage of the loan or deal value; the strike is usually set at the last round's price. Outstanding warrants sit in the fully diluted capitalization, so founders should count them when reasoning about dilution.