What is Bridge Financing?
Bridge Financing
Bridge Financing is short-term funding raised by a startup to maintain operations until it secures a larger institutional round or reaches profitability.
Why It Matters for Startups
Directly dictates the cap table and dilution structure during fundraising; understanding Bridge Financing helps founders model equity distributions when structuring rounds for emergency runway extensions and pre-round capital planning.
Detailed Deep Dive
Bridge Financing provides short-term cash to extend runway between major priced rounds. Startups use bridge financing to meet operational costs while finalizing negotiations with new lead investors.
Frequently Asked Questions
Q:How is bridge financing usually structured?
It is typically structured using convertible notes or SAFE notes that convert during the next priced round.
Q:Who typically provides bridge financing?
Existing investors who are committed to keeping the company capitalized until a new lead investor is found.
Quick Facts
- CategoryFunding
- Key ApplicationEmergency runway extensions and pre-round capital planning
Coverage Trend12 Weeks
Related Startup Terms
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