Can someone please explain penny warrants for a PrivateCo
I think I understand fundamentally how they work: You have the right but not the obligation to purchase a predetermined equity stake in a company for what is, essential, little to no cost.
My question is: What makes this structure beneficial to the holder of the warrants? Why not just have x% of ownership of the common/preferred/etc. equity from the beginning? Is it basically just a sweetener for an initial investment?
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