Bridge Financing

Category: finance

Short-term funding used by companies to cover their expenses until they can secure a permanent, long-term financing round.

Bridge loans are "stop-gap" money. They are usually expensive, high-interest loans (often in the form of convertible notes) provided by existing investors. It keeps the lights on for 6-12 months while the founders scramble to fix the company’s growth metrics to justify a proper Series-B round.

Common Examples

• The company raised a $2M bridge financing note from our lead investor to provide the runway needed to prove our new product market fit.
• If you have to rely on bridge financing multiple times, it is a clear indicator that your business model is not hitting the growth milestones required for institutional VC funding.