A warrant is a contractual right to buy newly issued shares from the company at a fixed strike price, usually until a stated expiry date. Unlike a secondary purchase, exercise creates new shares and therefore dilutes existing holders.

How do warrants affect dilution?

Outstanding warrants count towards fully diluted ownership because they can become shares. Ignoring them overstates every existing holder's percentage, which is why investors add them back during diligence.

Can Perseids track expiry dates?

Yes. Expiry is a tracked field and approaching expiries are surfaced so the company and the holder are not relying on memory.

Can warrants convert into shares?

A warrant is exercised rather than converted: the holder pays the strike price and the company issues shares of the specified class. Perseids records that as an exercise transaction.

Does exercise update the cap table?

Yes. Recording an exercise issues the shares and writes a transaction to the ledger, so the register, the fully diluted view and the history all move together.

Solution

Warrants should not live in spreadsheets.

Warrants are the instrument most likely to be missing from a private cap table. They are issued alongside debt, to advisors or as sweeteners in a round, then sit in a signed PDF until someone tries to exercise one. Perseids keeps them in the register, with their terms and their dilution impact visible.

The warrant register

Fields tracked per warrant
Field	Why it is tracked
Holder	Who may exercise, and how to reach them before expiry
Quantity	Shares the warrant can call for
Strike price	The exercise price, and therefore the cash on exercise
Expiry	The date after which the right lapses
Status	Outstanding, partially exercised, exercised or lapsed
Share class	The class issued on exercise, which affects rights and preference

Holder
Why it is tracked
Who may exercise, and how to reach them before expiry
Quantity
Why it is tracked
Shares the warrant can call for
Strike price
Why it is tracked
The exercise price, and therefore the cash on exercise
Expiry
Why it is tracked
The date after which the right lapses
Status
Why it is tracked
Outstanding, partially exercised, exercised or lapsed
Share class
Why it is tracked
The class issued on exercise, which affects rights and preference

Dilution modelling

Outstanding warrants belong in the fully diluted count whether or not anyone expects them to be exercised. Perseids includes them in the fully diluted view and in every scenario, so the ownership figure you quote to an incoming investor is the one their own model will produce.

See fully diluted ownership with warrants included, and compare it against issued-only ownership.
Model the cash received if outstanding warrants are exercised at their strike.
Check whether a warrant exercise moves any holder across a governance threshold.
Run a round scenario that assumes exercise before closing, as investors often require.

Exercise workflow

1Record the exercise notice, including quantity where exercise is partial.
2Record payment of the strike consideration.
3Issue the resulting shares in the correct class.
4The ledger updates as a transaction, and the warrant status moves to exercised or partially exercised.
5Issue a share certificate from the new holding if the company issues certificates.

Alerts before a right lapses

The expensive failure with warrants is silence: a window passes, a holder complains, and the company negotiates a remedy it did not owe. Perseids surfaces approaching expiry dates and open exercise windows on the company dashboard so the date is visible before it is a problem.

Warrant terms vary widely. Perseids records the terms you enter; it does not interpret the underlying instrument for you.

Frequently asked questions

What is a warrant?: A warrant is a contractual right to buy newly issued shares from the company at a fixed strike price, usually until a stated expiry date. Unlike a secondary purchase, exercise creates new shares and therefore dilutes existing holders.
How do warrants affect dilution?: Outstanding warrants count towards fully diluted ownership because they can become shares. Ignoring them overstates every existing holder's percentage, which is why investors add them back during diligence.
Can Perseids track expiry dates?: Yes. Expiry is a tracked field and approaching expiries are surfaced so the company and the holder are not relying on memory.
Can warrants convert into shares?: A warrant is exercised rather than converted: the holder pays the strike price and the company issues shares of the specified class. Perseids records that as an exercise transaction.
Does exercise update the cap table?: Yes. Recording an exercise issues the shares and writes a transaction to the ledger, so the register, the fully diluted view and the history all move together.

Put this into practice with Perseids.

Manage warrants