A warrant is similar to a stock option: it gives the holder the right to buy company shares at a fixed price later. Warrants are typically issued to investors or lenders rather than employees, often attached to a debt or SAFE deal as a sweetener.
Venture debt lenders commonly receive warrants alongside a loan, giving them a small equity upside if the company does well, on top of the interest they're earning on the debt itself. Part of why venture debt can look cheaper on paper than it actually is: the warrant coverage adds real dilution on top of the stated interest rate.
Unlike employee stock options, warrants aren't subject to the same vesting or 409A strike-price rules, since they're a negotiated investment term rather than compensation. They still show up on the cap table as a real source of future dilution once exercised, worth tracking with the same care as any other outstanding instrument.
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