Warrants are options that lenders or investors get as a sweetener. They're usually small (5-10% of the round size) and easy to ignore. That's the mistake. This episode walks through how warrants work and why they're actually a second, hidden dilution event. A warrant is the right to buy shares at a specific price (the exercise price) at any point in the future. If your company raises at a $50M valuation and the lender gets a warrant to buy 5% of the company at a $50M valuation cap, they can exercise that warrant at any time. If your company is later valued at $500M, that warrant is worth a fortune, and when they exercise it, your ownership percentage gets diluted. We use a real example: a company raised a $2M convertible note with a 5% warrant. The warrant had a $20M valuation cap. Three years later, the company was valued at $200M in a Series B round. The warrant holder exercised their warrant, buying 5% of the company at the $20M cap price. This diluted all existing shareholders by 5%. For the founders, this was a surprise because they'd negotiated the convertible note terms but hadn't focused on the warrant. The episode covers when warrants are reasonable (some lenders require them as compensation for risk) and when they're excessive (when you're being asked to give warrants on top of a high interest rate and a low maturity date). We close with the calculation framework: what's the fully-diluted impact of this warrant if the company is worth 5x, 10x, or 20x the current valuation?