Bridge Round

A bridge round fills the gap when a startup needs additional capital before it is ready for its next priced round. These rounds are typically $250K to $2M in size and structured as convertible notes or SAFEs with a discount (usually 15–25 %) to the next round's price. The goal is to provide enough runway to hit the milestones that will make the next major fundraise possible at favorable terms.

Common reasons for bridge rounds include: the company is close to key metrics but not quite there (e.g., needing 3 more months to hit $100K MRR for a Series A), market conditions have temporarily worsened making a full round difficult, or the company is pursuing a strategic pivot that needs funding before it can show traction. Existing investors are the most common participants because they already have context and a vested interest in the company's success.

Bridge rounds carry risks for both founders and investors. For founders, bridge capital often comes with higher dilution than a priced round would have, especially if milestones are not met and the next round happens at a lower valuation. For investors, bridge rounds in struggling companies can become "bridges to nowhere." The best practice is to only raise a bridge with a clear, time-bound plan for what milestones the capital will achieve and a realistic path to the next raise.