Up to ₹4L
Funding Stages
Bridge Round
In short
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.
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.
How It Works
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.
Application Process
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.
Real-World Example
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.
Key Takeaway
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.
Frequently asked questions
What is Bridge Round?+
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.
How does Bridge Round work?+
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.
What is the application process for Bridge Round?+
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.
What is an example of Bridge Round?+
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.
Related Terms in Funding Stages
Pre-Seed
The earliest stage of startup funding, typically preceding a formal product launch. Pre-seed capital comes from the founder's personal savings, friends and family, or early angel investors who believe in the idea before there is meaningful traction. The money is used to validate the core concept, build a minimum viable product, conduct initial customer discovery, and sometimes cover basic legal and incorporation costs. Pre-seed rounds in India typically range from ₹5–25 lakh and are often structured as convertible notes to avoid the complexity of pricing a round before the startup has a clear valuation.
Seed Funding
The first formal external funding round that a startup raises, typically after validating the problem and building an MVP. Seed capital is used to finance initial product development, early hires, market research, and the first push to acquire customers. In India, seed rounds range from ₹25 lakh to ₹5 crore and come from angel networks, micro-VCs, and government programmes like the Startup India Seed Fund Scheme (SISFS). Seed-stage investors evaluate the founding team, market size, and early traction signals rather than revenue. Most seed investments are equity-based, though convertible notes remain common.
Series A
The first major venture capital round, typically raised after a startup has demonstrated product-market fit with repeatable revenue, growing usage, or clear customer demand. Series A funding in India usually ranges from ₹10–50 crore and is led by institutional VCs who take a board seat as part of the deal. The capital is deployed to scale the team, expand to new cities or verticals, invest in sales and marketing, and build out the technology foundation for growth. Unlike seed investors, Series A investors scrutinise unit economics, gross margins, customer acquisition cost, and lifetime value. The round sets the company's valuation and usually involves significant dilution for founders — typically 15–25% of the company.
Series B
The second major VC round, focused on scaling a proven business model to the next level. Startups at Series B typically have established product-market fit, predictable revenue growth, and a clear path to profitability. The funding — typically ₹20–100 crore in India — is used to expand geographically, double the sales team, invest in category-leading product features, and build the operational infrastructure for much larger scale. Series B investors include many of the same firms from Series A (doubling down) plus growth-stage investors who look for companies with strong fundamentals. The bar for metrics is higher: investors want to see efficient unit economics, improving gross margins, and a large addressable market that justifies the growth investment.
Series C and Beyond
Later-stage funding rounds for mature startups preparing for an IPO or large-scale market expansion. Series C, D, and E rounds typically exceed ₹100 crore and attract a different class of investor — growth equity firms, hedge funds, sovereign wealth funds, and corporate venture arms that write large cheques. These rounds are used for aggressive market expansion (including international), strategic acquisitions, heavy brand marketing, and building the balance sheet ahead of a public listing. Later-stage investors prioritise revenue scale, market leadership, profitability trajectory, and governance standards. By this stage, founders often own a minority of the company but hold significant economic value through their remaining stake.
Down Round
A funding round in which the company's valuation is lower than in the previous round. Down rounds typically occur when a startup has underperformed against the growth trajectory it projected, market conditions have deteriorated, or the business model has proven less scalable than initially believed. For founders and existing investors, a down round is painful — it dilutes existing shareholders more than an up round, can trigger anti-dilution protections held by previous investors, and often demoralises employees whose stock options are now underwater. In India, down rounds became more common during the 2023–24 funding correction when overheated valuations corrected to more sustainable levels.
Our Services