A bridge round is short-term funding that carries a company from one point to another, usually from the money it has now to the next priced round or a sale. The name is the whole idea: you're building a bridge. The important question is what's on the other side.
Bridges have a mixed reputation. Done well, they let a company hit a milestone that makes the next round much easier. Done badly, they delay a hard decision and leave the company in the same position six months later with less runway and more dilution. This guide covers how to tell the difference and how to structure a bridge if you need one.
What a bridge round is
In practice, a bridge round usually has these features:
- It's smaller than a full round, often enough for six to twelve months of extra runway.
- Existing investors provide most of the money. They have the most context and the strongest reason to protect their investment.
- It's raised on convertible instruments, usually convertible notes or SAFEs, which convert into equity at the next priced round.
- It has a clear purpose, such as reaching a revenue level, finishing a product, or closing an acquisition.
You'll also hear the terms seed extension, Series A extension or "A-1". These are close cousins. An extension usually means raising more money at the same or similar terms as the last round, sometimes on a priced basis. In everyday conversation, people use bridge and extension almost interchangeably.
Bridges to somewhere vs bridges to nowhere
Investors often sort bridge requests into two buckets.
A bridge to somewhere
The company is close to a specific milestone that will unlock its next round or a sale. The bridge buys enough time to get there, with some margin. Examples:
- A SaaS company is two or three months from the revenue level Series A investors in its category expect, and the trend is clearly upward.
- A medical device company needs four more months to finish a regulatory submission that will substantially de-risk the business.
- A term sheet is signed but closing will take longer than the company's remaining cash.
- An acquirer has made an approach, and the company needs runway while negotiations proceed.
A bridge to nowhere
The company is running out of money, the next milestone isn't clearly defined, and there's no strong reason to think another six months will change the picture. Raising a bridge here can make sense if there's a realistic plan to change course, but often it just postpones a decision about cutting costs, pivoting or selling.
The difference isn't always obvious from the inside. Founders tend to be optimistic. A useful exercise is to write down, in one sentence, what will be true at the end of the bridge that isn't true now, and why that will make investors want to fund the next round. If you can't write that sentence clearly, investors won't find it either.
Common bridge structures
Convertible note
The traditional bridge instrument. Investors lend money that converts at the next priced round, usually with a discount and sometimes a cap. Notes carry interest and a maturity date. Investors sometimes prefer notes for bridges because they rank as debt if things go badly.
SAFE
Increasingly common, especially in the US. Simpler, no maturity date, no interest. A post-money SAFE also makes the dilution clear up front. See our comparison of SAFEs and notes.
Priced extension
Selling more of the same preferred shares as in the last round, at the same price. Simple and familiar, but it implies the company's value hasn't grown since the last round, which may or may not be true.
Venture debt
For companies with institutional backing and some revenue, a loan from a venture lender can bridge to the next round with less dilution. It comes with repayment obligations and covenants. Our venture debt guide covers the trade-offs.
Typical bridge terms
| Term | What to expect | What to watch for |
|---|---|---|
| Discount | Often 10% to 25% to the next round's price | Higher discounts for riskier bridges |
| Valuation cap | Often at or near the last round's post-money valuation | A cap below the last round signals a potential down round |
| Interest (notes) | Modest, converts into shares | Unusually high rates |
| Maturity (notes) | Commonly 12 to 24 months | Short maturities that create pressure |
| Warrants or sweeteners | Sometimes offered to compensate for risk | Can add meaningful hidden dilution |
| Liquidation preference multiple | Normally none on the bridge itself | Requests for 2x or more on conversion |
Terms depend heavily on leverage. A bridge for a company with a signed term sheet looks very different from a bridge for a company with three months of cash and no clear path.
How to pitch a bridge to existing investors
Your current investors are the natural source of bridge money. They're also the people most likely to be frustrated if the request comes as a surprise. How you approach them matters.
- Start early. Raise the possibility when you have nine to twelve months of runway, not three. Investors respond much better to planning than to emergencies.
- Talk to your lead first. If your lead investor won't participate, others will notice and may hold back. Understand their position before you go wide.
- Bring a plan, not just a number. Show the milestone, the timeline, the budget and the evidence that you're on track. Include what you'll cut if the bridge isn't fully subscribed.
- Be open about alternatives. Explain what you'd do without the bridge: cut burn, sell, or wind down. Investors need to know the stakes.
- Offer pro rata participation. Let every existing investor take their share before you look outside. It's fair and it avoids resentment.
Consistent investor updates make this conversation much easier. If investors have watched your progress month by month, a bridge request is a logical next step rather than a shock.
How outside investors view bridges
New investors look at a bridge round and ask one thing first: why aren't existing investors funding this? If insiders are leading the bridge, that's a positive signal. If they're not participating, outside investors will assume they know something negative.
That's why most bridges are insider-led, with outside money coming in alongside rather than leading. If you want an outside investor to lead a bridge, you'll need a strong story about why insiders aren't, such as fund constraints or a strategic investor with specific interest.
Impact on the cap table
Bridges add dilution in two ways. First, the discount or cap gives bridge investors more shares per dollar than the next round's investors. Second, if the bridge carries warrants or other sweeteners, those add shares too. Add in the option pool top-up that usually comes with the next round, and founders can see a bigger drop in ownership than they expected.
Model it. Build a pro forma cap table showing the bridge converting at a few plausible next-round valuations. Our cap table guide walks through the method.
Alternatives to a bridge
Before raising a bridge, consider whether another option would serve you better:
- Cut burn to extend runway. Painful, but it can turn a desperate bridge into a comfortable one or remove the need entirely.
- Revenue-based financing for companies with steady recurring revenue. See our guide comparing revenue-based financing and venture capital.
- Non-dilutive funding such as grants and tax credits. Our non-dilutive funding guide covers the main types.
- A smaller priced round at a fair valuation, even if it's lower than you hoped. Sometimes resetting expectations is healthier than delaying.
- Selling the company while it still has runway and negotiating leverage.
Signs a bridge is working
Once the bridge closes, track the milestone it was raised for as closely as you'd track cash. Share progress with investors monthly. If it becomes clear halfway through that you won't hit the milestone, say so early and present a revised plan. A second bridge is much harder to raise than the first, so the time to change course is when you still have options.
A short bridge-planning checklist
- Write the one-sentence milestone the bridge will reach.
- Confirm with target investors that the milestone will support the next round.
- Build a budget that reaches the milestone with at least three months of margin.
- Talk to your lead investor before anyone else.
- Choose an instrument and terms, and model the dilution.
- Prepare a cost-cutting plan in case the bridge is undersubscribed.
- Offer pro rata to all existing investors.
- Report progress against the milestone every month.
Frequently asked questions
What is a bridge round in startup funding?
A smaller, short-term round that gives a company enough runway to reach its next priced round or another event such as an acquisition. It's usually funded by existing investors through convertible notes or SAFEs.
Is a bridge round a bad sign?
Not necessarily. A bridge to a clear, near-term milestone is common and sensible. A bridge without a clear purpose, or one that insiders won't fund, is a warning sign.
How much should a bridge round be?
Enough to reach the target milestone with a few months of margin, often six to twelve months of runway. Too small and you'll need another bridge.
What's the difference between a bridge and an extension?
The terms overlap. An extension usually means selling more of the last round's shares on similar terms, while a bridge is more often raised on convertible instruments that convert at the next round.