What is a Bridge Round?
A Bridge Round is exactly what it sounds like: a smaller, interim round of funding designed to "bridge" the gap between two larger, priced financing rounds (typically between a Seed round and Series A).
Why do startups need them? Startups usually raise 18 months of runway. But sometimes, things go wrong.
- The Delay: Product development took longer than expected.
- The Missed Milestone: You haven't hit the specific revenue targets (e.g., £1m ARR) required to unlock a Series A.
- The Market: The economy is bad, and investors aren't deploying capital, so you need to survive until the market recovers.
How it is structured Bridge rounds are rarely "priced" (where you set a new valuation). Instead, they typically use Convertible Notes, SAFEs, or (in the UK) ASAs. Existing investors are usually the ones to step up. They "bridge" you because they want to protect their initial investment. If they don't give you the extra cash, the company dies, and their original equity goes to zero.
Is a Bridge Round bad? Not always, but it signals risk.
- The "Good" Bridge: You are growing fast, and you just need a little extra cash to hire a sales VP before going out for a massive Series A.
- The "Bad" Bridge: You are running out of money and growth has stalled. This is often called a "lifeline," and investors may demand harsh terms (like a lower valuation cap) to bail you out.
Key Takeaway: A bridge round buys you time. The goal is to use that time to hit the metrics that make you investable for the next big round.
