Funding Stages
A short-term funding round raised between larger, priced rounds — typically when a startup needs additional capital to extend runway, hit specific milestones before a Series A or B, or bridge a seasonal cash-flow gap. Bridge rounds are smaller than the preceding round (usually ₹1–5 crore in India), faster to close, and often structured as convertible notes or SAFE notes rather than priced equity. They buy the startup 3–12 months of additional time and help avoid raising a down round at an unfavourable valuation. For investors, bridge rounds offer an opportunity to invest at a discount to the next round's price.
A bridge round is a short-term financing that fills the gap between two larger, priced rounds. It typically occurs when a startup needs additional capital to extend runway, hit specific milestones before a Series A or B, or bridge a seasonal cash-flow gap — without the time or market conditions to raise a full priced round. Bridge rounds are smaller than the preceding round (typically ₹1–5 crore in India), faster to close (2–4 weeks compared to 8–16 weeks for a Series A), and often structured as convertible notes or SAFE notes that convert at a discount to the next round's valuation. Existing investors usually lead the bridge round because they have the most context and alignment. Bridge rounds buy the startup 3–12 months of additional time and can help avoid raising a down round at an unfavourable valuation. However, raising multiple bridge rounds without a priced follow-on is a red flag for future investors — it signals that the company cannot attract new institutional capital at a higher valuation.
1. Start with your existing investors — they have the most context and are usually willing to bridge to protect their existing investment. 2. Prepare a clear plan showing what the bridge capital will achieve and how it leads to the next priced round. 3. Negotiate terms quickly — standard convertible note with a 15–25% discount and a valuation cap is the norm. 4. Keep the round small — only raise what you need to hit the milestones that unlock the next round. 5. Communicate transparently with your board about the bridge rationale, timeline, and contingency plans.
A SaaS startup that raised a ₹2 crore seed round 14 months ago has ₹20 lakh in the bank and ₹6 L MRR. The founders need another 8–10 months to reach the ₹15 L MRR threshold that Series A investors expect. They raise a ₹1.5 crore bridge round from their existing seed investors as a convertible note with a 20% discount to the Series A valuation cap. The bridge gives them the time to hire two salespeople and run a targeted outbound campaign that grows MRR to ₹18 L — enough to open a successful Series A process six months later.
Bridge rounds are a tactical tool, not a strategy. Use them to reach a clear milestone that unlocks the next priced round, and be transparent with your board and investors about the timeline and risks. Multiple bridges without a priced round are a warning sign.