Ask HN: What is "warrant allocation"?

2 pointsnewoffer2 comments

I received a job offer from a startup, and among others it mentions:

The warrant allocation is in line with salary. If you joined at this stage and we have an exit in the $X range you could expect around N years salary to be paid out.

Can someone explain what this means?

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A warrant is very similar to an option: the future right to buy X shares of stock at a (normally nominal, in this case) fixed price. Your allocation is how many warrants you get. How much money they are eventually worth is very dependent on (biggest risk factor) whether you exit, at what price you exit, how many warrants you own relative to the total number of shares outstanding at exit, how much dilution has happened, and whether the money guys decide to screw you at or before the exit.

Ah thanks, haven't heard of warrants before and initial googling didn't help. Found it now: http://www.investopedia.com/ask/answers/08/stock-option-warr...

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