They are different from employee stock ownership plans, which are a type of retirement benefit plan, and from exchange traded options, which are purchased contracts to buy or sell publicly traded stocks at set prices in the future. Antidilution clauses, typically found in VC investment agreements and stock option programs, protect their holders' investments from downward price pressure. An antidilution clause doesn't guarantee, however, that its holder's current percentage of ownership never changes. These agreements, like employee stock options, give their holder, usually an outside investor or vendor, the ability to purchase shares in the company at a set price. Many startups short on cash have found creative ways to use warrants early in their development to pay lawyers, landlords and equipment vendors.
Problems can arise, however, when warrants are used too loosely.
This refers to the amount of startup capital a new company goes through each month or quarter as it tries to launch its product or come up with a salable discovery. But now that IT has such an influence over productivity, growth and innovation, the two worlds are closer than ever. Thus, a few key concepts and their implications for the IT executive. These refer to increasingly popular methods for turning a piece of a company into a separate division or wholly owned subsidiary. In a carve-out, the parent company establishes the division or subsidiary as a separate corporation, then offers new shares in the unit to public investors in an initial public offering.