A warrant is a form of investment security that functions like a stock option. It gives an individual or business the right to purchase a number of shares of common or preferred stock in a company at a specific price per share for a specific period of time. The per share purchase price is called the “exercise price.”

Frequently lenders and investors will ask promising companies for a “warrant kicker” which means they want a little extra compensation that can help them participate in the future growth in value of a company.