Definition
Bridge Round
A bridge round is interim financing that carries a startup from one major round to the next, often raised on convertible terms.
A startup running low on cash before it is ready for a priced round may raise a bridge — additional capital from existing investors or new angels, frequently via a convertible note or SAFE that converts at the next round, often with a discount. The bridge 'gets the company across' to the next milestone.
Bridges can be a sign of strength (extending runway opportunistically) or stress (struggling to raise a proper round). The terms, especially the discount and valuation cap, affect how much existing holders are diluted when the bridge converts.
Related terms
- SAFE NoteA SAFE (Simple Agreement for Future Equity) is an instrument by which an investor gives a startup money now in exchange for equity in a future priced round.
- Convertible NoteA convertible note is short-term debt that converts into equity at a future financing round, typically at a discount or valuation cap.
- RunwayRunway is the number of months a startup can keep operating before it runs out of cash, calculated from its current cash balance divided by its monthly net burn.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.