Best practices on working with warrants

Method 1: Adding a new round for Warrants

Add an New Round to account for the warrants.

  • Security Type: Other

  • Investment Amount: Price paid for warrants

  • Round Size: Same as investment amount

  • Valuation: The implied valuation of the company at the exercise price

You may also choose to enter data in the Share Mode where you can specify

  • Share Price: Exercise Price

  • Shares Purchased: Shares purchased via warrants

  • Total Shares Owned: Total shares owned post-warrants exercise

  • Total Shares Issue: Shares purchased via warrants

  • Fully Diluted Shares Outstanding: Shares outstanding at the company after warrant exercise

The aggregate valuation of the company will reset to the exercise price, so the next step is to add a Valuation Update event to recalibrate the aggregate valuation to the current aggregate valuation.

Method 2: Ownership Update

Alternatively, you can also simply add an Ownership Update event to reflect the new ownership in the company post-warrants. In this approach the price paid for the warrants is not captured in the invested amount into the company.

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