Venture lenders typically negotiate warrant coverage as additional equity-linked upside on top of interest — this converts that negotiated percentage into an actual number of warrant shares.
How it works
Multiplying the loan amount by the warrant coverage percentage gives the dollar value of warrant shares owed; dividing that value by the agreed strike price gives the actual number of warrant shares issued.
What this does not include
This does not include the actual dollar value of those warrants at issuance (which depends on the company’s volatility, time to expiry, and other option-pricing factors this site’s black-scholes and warrant-value-dilution calculators cover separately) — this converts coverage terms into a share count only.
How to use this calculator
- Enter the loan amount, warrant coverage percentage, and strike price.
Frequently asked questions
Why do venture lenders ask for warrants at all?
Venture debt is inherently riskier than typical commercial lending (borrowers are often unprofitable, early-stage companies), so warrants give the lender some equity-linked upside to compensate for that additional risk.
What’s a typical warrant coverage percentage?
Commonly in the 5%-20% range, though it varies significantly based on the lender, the company’s stage, and the overall deal terms negotiated (a lower interest rate is sometimes traded for higher warrant coverage, or vice versa).
What strike price do venture debt warrants typically use?
Often the price of the company’s most recent priced equity round, though specific terms vary by deal.
