Bridge Round

A bridge round is a short-term financing that "bridges" a company between major funding rounds. It is typically smaller than a full round, raised from existing investors, and structured as a convertible note or SAFE. The purpose is to give the company enough runway (usually 6-12 months) to hit milestones that will support a larger raise at a higher valuation.

Bridge rounds are common and not inherently negative, but context matters. A bridge raised because the company is growing fast and wants a few more months of data to command a higher valuation is healthy. A bridge raised because the company failed to raise a full round and is running out of cash is a warning sign. Investors distinguish between "bridge to somewhere" and "bridge to nowhere."

Existing investors often have a right of first refusal or pro rata rights that give them priority in bridge rounds. The terms typically include a discount or cap that rewards bridge investors for the added risk. Some bridge rounds include a "most favored nation" clause guaranteeing the bridge investor gets at least as favorable terms as any subsequent investor.