Bridge round

What is a bridge round?

A bridge round is short-term funding, usually from existing investors, to carry a company to its next milestone or priced round. Bridges are typically unpriced and often use convertible notes, so the price is set at the next round. Companies raise them to extend runway, to finish proving a milestone, or to strengthen the balance sheet before a sale or IPO.

Why it matters to a revenue leader

A bridge buys time, and the sales results during that time decide whether it worked. Investors in a bridge are betting that a specific milestone, often a revenue level, will be reached before the money runs out. A revenue leader should know exactly which milestone the bridge was raised to reach, because that milestone becomes the sales plan.

A company with 6 months of runway and a net burn of $375,000 a month raises a $3 million bridge on convertible notes from its existing investors. Runway grows to 14 months, and the insiders expect ARR to rise from $5 million to $8 million before a Series B. The sales forecast now decides whether that round happens.