When to raise a bridge round as a startup and how to do it right

If you’re a startup founder, you’ve probably heard the term bridge round thrown around, and most probably for a good reason. These rounds usually come between larger raises, like between a Seed and Series A, or Series A and B, and they’re often used to buy time, achieve goals from your plans, or prepare for a stronger fundraising push. 

Timing doesn't always line up perfectly in today’s unpredictable world of building a company. Maybe you’re waiting on a product launch, finalizing hiring an important employee, or aiming for a higher revenue growth, but your cash reserves are running low. A well-timed bridge round can make the difference between staying in the same place and pushing you a few steps ahead.

What are bridge rounds?

‍A bridge round is a short-term funding solution designed to help startups move from one milestone to the next. It is not meant to replace a full fundraising round but rather to extend the company’s runway.

The money from a bridge round can serve several different purposes. It might stabilize cash flow during a slower sales period, fund an important product development sprint, or cover operating expenses while a larger round is still coming together. Since they are a short-term solution for fundraising, they typically come as a convertible note or SAFEs. 

These rounds are most often filled by existing investors who already believe in the startup’s potential, and or venture capital firms looking to join the next round.

Benefits of a bridge round

Whether your company is dealing with unexpected delays or preparing for the next milestone, a bridge round can help you stay on track, keep your team focused, and show your investors that you're making the right decisions under pressure. 

Here are some of the key benefits of bridge rounds:

• Quick access to capital: Bridge rounds are usually faster to raise compared to traditional rounds, especially if you are raising from existing investors. 
• Helps you keep momentum: Rather than slowing your company down, if you are waiting to raise larger rounds, a bridge round lets you maintain an existing pace. 
• More flexible structures: Convertible notes or SAFEs will delay the valuation discussions until the next larger priced round, which can help you during negotiations with investors and save time during an already tight period. 
• Get support from existing investors: Bridge rounds are considered easier to raise since they often involve existing investors who want to protect their investments. 

Risks and challenges of raising a bridge round 

Raising a bridge round between funding stages, such as between Seed and Series A or Series A and Series B, can be a good strategy; however, it also comes with specific risks that founders need to be aware of and avoid.

During these in-between stages, investors expect to see tangible progress, such as achieving product-market fit, growing revenue, or early scale. If you're thinking about raising a bridge round during this time, it's important to approach them with a clear plan. Knowing what potential risks you can encounter ahead of time can help you avoid common mistakes and stay on track for your next raise.

Here’s what founders should be aware of when considering a bridge round between funding stages:

• ‍A perception of weakness: One of the biggest concerns is how the market may perceive a bridge round. If your company needs extra capital before hitting a typical goal, it can raise questions about performance, product-market fit, or growth velocity. The perception risk can make it harder to attract new investors in the next round unless the purpose of the bridge is strategic and well-communicated.

• ‍Dilution risks: Bridge rounds often come in the form of convertible notes or SAFEs, and terms like valuation caps or discounts can impact founder equity. If the company takes longer than expected to raise the next priced round, those terms may convert under less favorable conditions, leading to more dilution than anticipated
• Investor concerns: Existing investors may be hesitant to reinvest if they feel the company hasn't made enough progress since the last round. New investors, on the other hand, might demand preferential terms, seeing the bridge round as a sign of vulnerability. This can lead to challenging negotiations and delays in closing the round. Raising a bridge round too close to your next priced round can complicate cap table dynamics and negotiations. For instance, if the terms of the bridge round are too generous or if it introduces conflicting investor interests, it can create friction when raising your Series A or B.
• ‍Complications for future fundraising: Raising a bridge round too close to your next priced round can complicate cap table dynamics and negotiations. For instance, if the terms of the bridge round are too generous or if it introduces conflicting investor interests, it can create friction when raising your Series A or B.
• ‍Unclear roadmap planning: A bridge round only works well if it’s tied to specific, achievable goals, such as hitting a revenue target, finalizing a product, or expanding into a new market. Without clearly defined milestones, it becomes difficult to justify the need for the round and to prove to future investors that the capital was used effectively.

When do founders need to raise a bridge round? 

Bridge rounds are all about timing, and knowing when to raise one can make a big difference in your company’s ability to keep moving forward. Founders typically turn to bridge funding when an unexpected event alters their original plan or when they identify an opportunity to enhance their position before the next major funding round. While every situation is different, there are a few common scenarios where a bridge round makes sense.

Here are some of the key moments when raising a bridge round can be the right move:

• ‍When your next round is delayed: Sometimes, your next funding round gets pushed back, whether due to changes in market conditions, investor sentiment, or a pivot in company strategy. If you’re not quite ready to go out for a full Series A or B, a bridge round can help you extend your runway and buy the time you need to get back on track.
• ‍Unexpected expenses or challenges: Startups move fast, and not everything goes according to plan. Maybe your burn rate increased due to unexpected hiring needs, a product delay, or legal costs. Rather than slamming the brakes, a bridge round gives you the capital cushion to manage surprises without losing momentum.
• ‍A chance to boost valuation: In some cases, founders raise a bridge round not out of necessity, but because they see an opportunity to increase traction and, in turn, drive up valuation for the next round. A small amount of extra capital can go a long way if it helps you hit a big milestone, land a major customer, or improve key metrics before going back to investors.

What is the right time for a bridge round?

If you wait until you're almost out of cash, you’ll be negotiating from a position of weakness and likely making rushed decisions. The best time to raise a bridge round is before you’re in urgent need, when you still have leverage, clarity, and a story that makes sense to investors.

If the market is cooling or investors are being more cautious, it might be smarter to wait before raising a full round. In the meantime, a bridge round can give you time to build more traction and approach your next raise when conditions improve. Keeping a pulse on the funding climate helps you stay ahead of potential slowdowns.

When not planned carefully, a bridge round can create more problems than it solves, especially when it sends the wrong message or forces you into unfavorable terms. Founders need to be aware that timing isn’t just about need; it’s about optics, leverage, and having a solid plan in place. Here’s what can go wrong with a poorly timed bridge round:

• It can signal distress to the company — If you wait too long and raise a bridge round when your cash is nearly gone, it can signal to investors that the company is in trouble. 
• You may face dilution or bad terms — desperation can lead to giving up more equity than you intended. Without enough time to negotiate, you might lock yourself into a deal that hurts your long-term cap table.

What investment instruments do you need in a bridge round? 

Bridge rounds can be structured in a few different ways, depending on the startup’s needs and investor preferences. While the goal is the same, you can use different investment instruments. The three most common structures in Europe are Convertible Notes or Convertible Loan Agreements, SAFEs or Simple Agreements for Future Equity, and direct equity financing. Each comes with its own pros, cons, and considerations.

• ‍CLAs for bridge rounds: CLAs are short-term debt instruments that convert into equity when the startup raises a future financing round. They typically include interest and a maturity date, making them behave more like a traditional loan in the early stages. CLAs are popular because they offer a clear and familiar structure for investors while keeping the valuation conversation until the next round. However, since they are technically debt until conversion, they appear on the company’s balance sheet and can carry some pressure if the company doesn't raise a qualifying round in time.‍
• SAFEs for bridge rounds: SAFEs are a more founder-friendly alternative to convertible notes. Unlike CLAs, they aren’t debt, which means no interest, no maturity date, and no risk of needing to pay anything back. SAFEs give investors the right to receive equity in a future priced round, usually at a discount or with a valuation cap. When there is no set timeline for conversion, investors may wait longer to see returns, which could make some more cautious. Additionally, because conversion only occurs at a future funding event, founders must be clear about what triggers this event and ensure that everyone’s expectations are aligned.

6 best practices for raising a bridge round

Unlike traditional rounds, bridge financing often happens under pressure, when timing is tight or uncertainty is high. Here are six things founders should keep in mind when preparing for a successful bridge round:

1. Define clear objectives for the round

Before you raise a single dollar, get focused on what the bridge round is meant to achieve. 

Are you extending your runway to hit a revenue milestone? Launching a long-awaited product feature? Closing a key partnership? Investors will want to know precisely how this capital moves your company forward, so be specific and show how it bridges the gap to your next big goal.\

2. Start with your existing investors

Your current investors already know your business and have contributed to its success. Approach them early to measure their interest in participating in an upcoming round. 

Not only are they more likely to move quickly, but securing their commitment first helps build momentum and signals confidence to any new investors you’re trying to bring in.

3. Leverage warm relationships for early traction

Use your existing network to secure commitments before expanding your reach. Having some early interest helps establish credibility and encourages others to join in. 

Momentum matters, especially with shorter rounds like these.

4. Be transparent about the “why”

Open communication builds trust. Whether you’re talking to investors, team members, or advisors, be upfront about why you’re raising a bridge round, what changed (if anything), and how the funds will be used. 

The more clearly you tell your story, the easier it will be to get buy-in from everyone involved.

5. Align early on legal and important terms

Make sure everyone’s clear on the key details: valuation caps, discounts, interest rates (if applicable), and potential dilution. Misunderstandings here can slow things down or cause bigger problems later. 

Have everyone aligned so that you can move the needle forward for the round and avoid potential friction during the process.

6. Plan for the “what if” scenarios

Hope for the best, but plan for the worst. What happens if your next funding round takes longer than expected? Or doesn’t happen at all? Be honest with yourself and your investors about the risks, and have a plan B. This demonstrates that you are well-prepared and can make investors more confident in your leadership.

Need more insights into bridge rounds?

For more insights into bridge rounds, watch this SeedBlink webinar: