===== What is a warrant? =====

A warrant gives a party (usually a lender or investor) the right to purchase additional shares of the company at some agreed-to price (often at a price discounted from the current price). Such warrants are often negotiated as part of a loan to "sweeten" the loan for the lender or as part of an investment round to "sweeten" the investment and help close it. Notice that a warrant gives a party more upside potential, i.e., if the company does well, the party can in effect "double down." At the same time, warrants do not add more risk for either party.

**Related Question:**

**[[:faqs:investments:how-warrant|How to create a warrant in Offtoa?]]**