Definition of Warrant

A Warrant is a financial instrument that gives the bearer the right but not the obligation to buy stock at a fixed price for a given period of time.
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Warrants are often issued as a "sweetener" or "kicker" in a funding round. They are given to investors as a bonus for making their investment, either in an equity financing or a debt financing.

Warrants are sometimes more specifically referred to as subscription warrants or stock-purchase warrants.

In some cases, warrants are issued to vendors in lieu of payment or as partial payment. This allows the issuing company to conserve prescious cash and gives the vendor potentially significant upside if the company does well.

Warrant References On This Site

These Gaebler.com articles mention this glossary term:

• Product Portfolio Strategies - But before you can maximize your product portfolio's effectiveness, you first need to know how to classify your current products, and determine which products warrant the most focus and investment...
• Outsourcing Advice for Small Business Owners - Many businesses feel graphic design work does not warrant hiring someone full-time, or that graphics hardware and...
• Good Manufacturing Practices (GMPs) - Many small businesses I visit claim they don't document because they are not big enough to warrant the procedure. Remember, quality control is important for businesses...
• Choosing an International Shipper - Due to the mass proliferation of airmail, surface post for most typical business shipments does not cost significantly less to warrant its use at the due to the extended time...
• Behavioral Finance - Because the investor is loss averse and wants to get back to even, he or she will hold onto the losing security hoping that it will come back even if no evidence exists to warrant such an expectation. On the other hand, an investor...
• Planning a Patent Strategy - In a fast moving industry like computers, only core technology may last long enough to warrant patent protection, but particular implementations may change so fast...
• Tenant Screening for Credit Worthiness - A Tenant with no credit at all does not warrant a large Tenant Improvements allowance. You may find yourself...
• Balance Sheet Interpretation Part IV: Current Assets - If it is, this means that the business is selling more and more on credit, which also warrants a full investigation...
• When to Fire an Employee - One of the issues I had to deal with as a manager was taking into consideration if the individual in question had sufficient skill to warrant some tolerance of bad behavior...
• Subordinated Debt - In addition to the increased interest rate, lenders of subordinated debt will often require the company to issue warrants or convertible bonds (which the lender can choose to...
• From Travel Industry Job to Travel Entrepreneur - The new directors replaced the customer service department with more accountants, and decided they didn't need anyone doing anything innovative with the current economic situation and had to cover for overexpenditures and compensate for huge losses the previous year and they decided my job did not warrant a full-time position...
• When Passion Isn’t Enough - We have to be able to be as objective as possible when we are criticized to see if the criticism warrants making a change in our process. Of course, not...
• Hiring a Bookkeeper - If you outsource your bookkeeping, as soon as the amount of work becomes consistent enough to warrant bringing someone on the payroll, you should make that...
• Common Problems with Acquisitions - To warrant this premium, a company must be sure that acquisition...
• Best Businesses For Entrepreneurs and Investors - This year won't be easy, but we anticipate strong growth will return to the market and since entry barriers and start-up costs are relatively low - along with the growing popularity of online retail - we believe this industry warrants inclusion in the list," said van Beeck...
• Product Portfolio Strategies - But before you can maximize your product portfolio's effectiveness, you first need to know how to classify your current products, and determine which products warrant the most focus and investment...
• Outsourcing Advice for Small Business Owners - Many businesses feel graphic design work does not warrant hiring someone full-time, or that graphics hardware and...
• Subordinated Debt - In addition to the increased interest rate, lenders of subordinated debt will often require the company to issue warrants or convertible bonds (which the lender can choose to...
• Behavioral Finance - Because the investor is loss averse and wants to get back to even, he or she will hold onto the losing security hoping that it will come back even if no evidence exists to warrant such an expectation. On the other hand, an investor...
• Common Problems with Acquisitions - To warrant this premium, a company must be sure that acquisition...
• When to Fire an Employee - One of the issues I had to deal with as a manager was taking into consideration if the individual in question had sufficient skill to warrant some tolerance of bad behavior...
• Good Manufacturing Practices (GMPs) - Many small businesses I visit claim they don't document because they are not big enough to warrant the procedure. Remember, quality control is important for businesses...
• Planning a Patent Strategy - In a fast moving industry like computers, only core technology may last long enough to warrant patent protection, but particular implementations may change so fast...
• Best Businesses For Entrepreneurs and Investors - This year won't be easy, but we anticipate strong growth will return to the market and since entry barriers and start-up costs are relatively low - along with the growing popularity of online retail - we believe this industry warrants inclusion in the list," said van Beeck...
• Tenant Screening for Credit Worthiness - A Tenant with no credit at all does not warrant a large Tenant Improvements allowance. You may find yourself...
• When Passion Isn’t Enough - We have to be able to be as objective as possible when we are criticized to see if the criticism warrants making a change in our process. Of course, not...
• From Travel Industry Job to Travel Entrepreneur - The new directors replaced the customer service department with more accountants, and decided they didn't need anyone doing anything innovative with the current economic situation and had to cover for overexpenditures and compensate for huge losses the previous year and they decided my job did not warrant a full-time position...
• Choosing an International Shipper - Due to the mass proliferation of airmail, surface post for most typical business shipments does not cost significantly less to warrant its use at the due to the extended time...
• Hiring a Bookkeeper - If you outsource your bookkeeping, as soon as the amount of work becomes consistent enough to warrant bringing someone on the payroll, you should make that...
• Balance Sheet Interpretation Part IV: Current Assets - If it is, this means that the business is selling more and more on credit, which also warrants a full investigation...