Full Definition
A bridge round is a short-term financing designed to provide a startup with enough capital to reach its next major funding milestone. Bridge rounds typically use convertible notes or SAFEs and are meant to "bridge" the gap between two larger rounds.
When Startups Raise Bridge Rounds
- Need more time to hit metrics for the next round
- Unexpected expenses or delays in growth
- Market conditions making a full round difficult
- Close to a major milestone that would improve valuation
Typical Bridge Round Characteristics
- Smaller amounts ($200K - $2M typically)
- Usually from existing investors
- Convertible notes or SAFEs with favorable terms for investors
- Expected to convert into the next priced round
Real-World Example
A startup 3 months from Series A raises a $500K bridge round from existing seed investors to extend runway while closing three key enterprise deals.
Related Terms
A short-term debt instrument that converts into equity during a future financing round.
A Y Combinator-created investment instrument that converts to equity in a future priced round.
The amount of time a startup can operate before running out of cash, given its current burn rate.
The rate at which a startup spends its cash reserves, typically measured monthly.
A funding round where a company raises capital at a lower valuation than its previous round.
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