Irish startup founders, CEOs, and CFOs negotiating with investors or lenders requesting share warrants in venture debt, bridge rounds, or partnerships.
Readers will gain insights into warrant mechanics, dilution modeling, essential negotiation terms, and compliance with Irish company law to safeguard equity and structure deals effectively.
Key Takeaways
Share warrants grant the right to purchase shares at a fixed price, creating potential future dilution overhang on the cap table until exercised.
Most common in Irish startups for venture debt sweeteners (0.5-2% coverage), bridge incentives, advisory pay, and partnerships.
Key negotiable terms: exercise price, period (5-10 years), vesting, anti-dilution, cashless exercise to manage dilution risk.
Model fully diluted cap table including warrants before deals; they impact investor assessments.
Irish Companies Act 2014 requires allotment authority, pre-emption handling, constitutional checks, and CRO Form B5 filings on exercise.
Share warrants give the holder the right to buy a specified number of shares at a fixed exercise price before expiry. No shares are issued until exercised. They differ from employee options (for internal use) and convertible loan notes (automatic conversion), often attached as sweeteners to debt or bridge rounds.
When are warrants used in Irish startups?
Warrants are common in venture debt (0.5-2% coverage), bridge rounds for upside, advisory fees instead of cash, and strategic partnerships. They provide future equity stake without immediate issuance, letting holders benefit from company success before exercising.
What key terms should founders negotiate?
Negotiate exercise price (often recent round price), exercise period (5-10 years), vesting conditions (milestone-based), anti-dilution adjustments, and cashless exercise. These control dilution timing and extent on your cap table.
How do warrants affect founder dilution?
Warrants create cap table overhang with no immediate dilution. On exercise, they dilute shareholders. Include in fully diluted share capital calculations with options and convertibles. Model scenarios before deals to assess impact.
What does Irish law require for warrants?
Under Companies Act 2014, ensure board/shareholder authority for allotments, address pre-emption rights (disapply if needed), check constitution, and file Form B5 with CRO within 30 days of exercise. Review shareholders' agreement.
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