In the fast-moving world of startups, funding timelines don't always align with business needs. Sometimes, your company is on the brink of major progress—but the next equity round isn’t quite ready to close. Enter the bridge round, a flexible funding tool that can help startups extend their runway and maintain momentum.
What Is a Bridge Round?
A bridge round is a form of interim financing designed to support a startup between two major funding rounds. As the name suggests, it acts as a bridge, providing short-term capital to help a company get from point A (e.g., post-Seed) to point B (e.g., Series A).
Bridge rounds can take the form of:
- Convertible notes
- SAFE notes (Simple Agreement for Future Equity)
- Equity at a discounted valuation
These instruments are typically faster and simpler to negotiate than priced equity rounds, making them ideal for founders looking to raise quickly.
How Bridge Rounds Work
Bridge rounds are often initiated by existing investors who believe in the company’s trajectory but agree that it’s not the right time for a larger round. The key mechanics involve issuing short-term securities (often with a discount or valuation cap) that convert into equity at the next priced round.
Some founders also invite new investors into the bridge round, particularly those they hope will lead the next round. This dual purpose—providing capital while building investor momentum—makes bridge rounds a strategic lever.
Key terms typically include:
- Discount rate (usually 10-30%)
- Valuation cap (a ceiling on the valuation at which the investment converts)
- Maturity date (when the note is due if a priced round hasn’t occurred)
What Investors Expect in a Bridge Round (and How to Win Them Over)
Investors today are more cautious than ever when it comes to bridge rounds, particularly in a market environment where valuations are under pressure and runway expectations are increasing. To earn their support, founders need to be both transparent and strategic.
First, it's crucial to clearly communicate why a bridge round is being raised instead of a traditional priced equity round. Investors want to know this isn't just a last-ditch effort to stay alive, but a calculated move to extend runway in order to achieve specific, value-creating milestones.
Second, founders must show exactly how the capital will be used and what outcomes it is expected to deliver. A clear use of funds—such as boosting MRR, funding key hires, or finalizing a product—demonstrates focus and discipline. Alongside this, it’s important to provide an updated set of traction metrics. These might include improvements in revenue growth, customer retention, or burn efficiency. Metrics like these help investors assess the likelihood that your bridge round will lead to a successful next raise.
A realistic timeline for the next funding round is also essential. Investors will want to see that you're planning not just how to survive the next six to twelve months, but how you’ll convert this capital into measurable progress and future investor interest. If you already have interest from potential Series A investors, or are in ongoing discussions, that’s worth highlighting.
Lastly, investor psychology matters. Most new investors in a bridge round will want to see that your existing backers are also participating. It sends a strong signal that those closest to the business still believe in its potential and are willing to double down.
By showing transparency, focus, strong metrics, and internal support, founders can shift the perception of a bridge round from a rescue plan to a strategic growth extension.
Key Metrics to Help Justify Your Bridge Round
Metrics that boost investor confidence:
- Monthly/Annual Recurring Revenue (MRR/ARR) growth
- Customer acquisition cost (CAC) and lifetime value (LTV) trends
- Burn multiple improvements
- Net revenue retention (NRR)
- Runway management: extending cash without excessive dilution
- Milestone achievements: product launches, new markets, major partnerships
When Should a Startup Consider a Bridge Round?
There are several scenarios where a bridge round makes sense:
You're Close to a Milestone That Could Improve Valuation
If you’re just months away from hitting a major milestone (e.g., launching a product, reaching €1M ARR), it may make sense to raise a bridge round now—then return to market with a stronger valuation.
Your Next Round Is Delayed
Sometimes, your lead investor for the next round needs more time. Instead of pausing operations or burning through cash, a bridge round buys you the time you need.
You Need a Capital Boost to Hit Growth Targets
Bridge rounds can be used to fund a sales push, expand to new markets, or invest in product development before a larger raise.
You Want to Avoid Raising Too Early at a Low Valuation
Rather than accepting a lower valuation now, founders sometimes raise a bridge round to delay the full raise until the business is in a stronger position.
You’ve Hit the "Series A Wall"
Today, moving from Seed to Series A is harder than ever. Investors now often expect €2–3M+ in ARR, up from €1M just a few years ago. Bridge rounds have become a necessary step for many strong companies that haven't yet hit those revised metrics.
Pros and Cons of Bridge Rounds
Pros:
- Quick access to capital
- Avoids premature valuation
- Flexible structures (SAFE, convertible notes)
- Minimal dilution in the short term
- Opportunity to prove traction before next round
- Opens dialogue with future investors
Cons:
- Can signal financial instability if not communicated clearly
- May require investor concessions (e.g., discounts or caps)
- Risk of over-reliance on bridge rounds
- Not all investors reserve funds for bridges—especially with SAFE rounds
- Can become complex if multiple bridges stack up
Market Dynamics: Why Bridge Rounds Are on the Rise
The current funding landscape is marked by heightened investor scrutiny and valuation resets. According to PitchBook, nearly 30% of VC deals in 2024 were flat or down rounds—the highest in over a decade. Series A investors now expect more mature businesses with clearer paths to profitability, pushing startups to raise bridge rounds to meet new expectations.
Moreover, SAFEs dominate early-stage rounds, but many investors are hesitant to reserve capital for follow-ons unless they’ve led a priced equity round. Founders who raised from multiple small checks via SAFEs may struggle to secure bridge funding unless they have strong traction and a clear plan.
In 2025, Carta data shows that 20% of all venture rounds were down rounds—double the historical average—while time between funding rounds has lengthened beyond the traditional 18–24 months. Founders are now planning for at least two years of runway, leading to more strategic use of bridge rounds to meet new, tougher growth milestones.
On the flip side, some industry experts believe the normalization of bridge rounds is a net positive for the startup ecosystem. It encourages more collaboration between early-stage and growth-stage investors, helping companies gradually mature instead of leaping into premature growth financing.
Bridge Round Alternatives: What Else Can You Consider?
If a bridge round doesn’t feel right, consider:
- Non-dilutive funding (e.g. Gilion): Revenue-based financing or other cash-flow-linked capital without equity loss
- Strategic partnerships: Distribution, revenue share, or advance deals with enterprise customers
- Extension rounds: Reopening your last priced round with existing terms
- Bootstrapping: Reducing burn to stretch current cash and hit milestones before fundraising
For example, a SaaS startup has reached €800K ARR and is expecting to hit €1.2M in six months. Instead of raising a Series A now at a lower valuation, the founders raise a €500K bridge round via SAFE notes. The capital is used to boost sales and polish investor materials. Six months later, they raise Series A at a 40% higher valuation.
This kind of scenario is increasingly common, especially with the bar for Series A rising from €1M to €3M in ARR, making bridge rounds a useful strategy to extend runway without excessive dilution.
Bridge rounds can be a smart funding tool when used strategically. They give startups breathing room, flexibility, and the opportunity to raise on better terms. However, they should be approached with clarity, clean cap table planning, and a solid roadmap.
It's essential to understand your metrics, assess whether venture capital is right for your growth pace, and plan for at least 24 months of runway. Many founders are using bridge rounds as a way to avoid down rounds or extend their lifeline in a more disciplined funding environment.
