capital-raising
Bridge financing is short-dated capital meant to reach a defined event — a priced round, a sale, or cash-flow breakeven. It is a timing instrument. If the event misses, the bridge becomes the capital structure.
A bridge is defined by the destination. In venture, that is often the next priced round; the instrument is a convertible note or an insider-priced tiny round. In PE-backed companies, a bridge may be a delayed-draw facility or a sponsor loan to hit covenants. In a sale process, a bridge may keep the lights on until closing.
The honest question: what happens if the date slips. If the answer is “another bridge,” you are doing capital raising in slow motion at worse terms.
Insider bridges are fast and politically loaded: they reset leverage over the cap table. New-money bridges look more like a mini-round. Either can include a “pay to play” if later prefs are being rewritten.
Six months of runway, Series B “in diligence.” A €1.5m insider note with a 20% discount and a cap below the last round. The B slips six months. Two more notes. Fully diluted founder ownership drops more than the missed B would have done at a slightly lower pre-money. The bridge was more expensive than swallowing a down round earlier.
Bridging a broken commercial story. No cap, “because we’re all friends.” Using a bridge to avoid a quality of earnings conversation a later investor will force anyway.
Bridges do not create a market for the next round. They also add debt-like risk if they actually mature.
If you need a bridge, the information problem is usually already visible: messy financials, no single valuation object, no matched investors. Fix the layer; then size the bridge to a real date.