Bridge Financing
Short-term funding used to bridge the gap between two financing rounds or before a major milestone. Bridge financing provides immediate capital while you prepare for a larger raise.
What Is Bridge Financing?
Bridge financing is short-term funding used to "bridge" the gap between two events — typically between funding rounds, before a revenue milestone, or while closing a larger deal. It provides immediate capital to sustain operations while you work toward a position to raise on better terms.
Common Types of Bridge Financing
Convertible notes: Short-term debt that converts into equity at the next financing round. The most common bridge instrument.
SAFE notes: Simple agreements for future equity — faster and simpler than convertible notes.
Revenue-based financing: Capital tied to your revenue, repaid as a percentage of monthly revenue. Non-dilutive and well-suited to SaaS businesses with predictable MRR.
When Should You Consider Bridge Financing?
Bridge financing makes sense when you need 3-12 months of runway to hit a milestone that unlocks better terms (e.g., hitting $1M ARR before raising a Series A). It is less ideal as a pattern — if you find yourself repeatedly taking bridge rounds, it may signal that your burn rate is too high relative to growth or that your milestones need recalibrating.
