Bridge Round / Convertible
Bridge Round / Convertible: How to Raise Capital, What Investors Look For, and How Founders Win
June 2025
Stage: Interim Capital Between Institutional Rounds A Bridge Round is a short-term financing tool designed to “bridge” a company between major equity rounds. This round is usually raised when the company is progressing well but not yet ready for its next priced round—or if macro conditions have delayed the ideal fundraising window. Bridge rounds offer flexibility and speed while giving the startup additional runway to hit key milestones that unlock more favorable terms later. It’s a tactical decision, not a long-term capital solution. Capital Structure: Convertible Notes, SAFEs, or Short-Term Debt Bridge capital is often structured using convertible notes or SAFEs, both of which convert into equity at the next priced round. Convertible notes may carry interest and maturity dates, while SAFEs typically do not. Valuation caps and discounts are used to reward early entry. In some cases—especially for later-stage bridges—structured equity or short-term debt with warrants may be used instead. Terms can become more investor-friendly if the company is under time pressure or facing weaker-than-expected metrics. The raise size typically ranges from $1M to $10M. Strategic Purpose: Buying Time for Leverage, Not Just Survival Done well, a Bridge Round enables a startup to raise on better terms at the next major round by achieving product updates, customer wins, or financial goals. It’s best used as a proactive strategy to unlock future valuation upside—not as an act of desperation. Founders should be careful not to stack multiple bridge rounds without clear narrative progress, as that can erode investor confidence and limit future optionality. A strong bridge round sets up the company for a healthier cap table and stronger institutional relationships down the line.
When & Why Do Startups Raise at the Bridge Round / Convertible Stage?
Bridge Rounds or Convertible Rounds are used when startups need capital between major equity rounds—often to hit critical metrics, extend runway, or prepare for a strategic event like an acquisition or IPO. These rounds are usually structured as convertible notes or SAFEs, and appeal to investors who want favorable terms while deferring valuation discussions. Founders raise bridge rounds when momentum is building but they aren’t quite ready for the pricing and diligence of a new round. The round may be insider-led, or pulled together quickly from friendly angels or family offices. While useful for tactical flexibility, repeated bridge rounds can be risky if they stack dilution or signal instability. Startups should use this round to unlock a well-defined outcome: new market entry, product launch, or closing a major partnership. If done intentionally and with focus, bridge capital can serve as a springboard to a much stronger next raise.
What Do Investors Look for at the Bridge Round / Convertible Stage?
Bridge or Convertible Round investors want proof that their capital will unlock the next round or major milestone. They look for a tight use-of-funds strategy and short-term upside. Investors evaluate the likelihood of a near-term priced round and their conversion mechanics (e.g., cap, discount). Founders must present a compelling case for the interim raise—growth metrics, closing enterprise deals, or clearing technical risks. Clean cap tables and clear conversion terms are critical to attract these investors.
Typical Bridge Round / Convertible Round Sizes, Valuations & Deal Terms
Bridge Rounds or Convertible Rounds help companies raise interim capital between priced rounds. Check sizes range from $1M to $10M, usually on convertible notes or SAFEs with valuation caps. Caps typically match or lightly discount the expected next round valuation ($15M–$50M). Discounts range from 10–25%. Terms may include interest rates (6–8%), maturity dates, and sometimes warrants. These rounds must balance speed with signaling risk. This highlights the importance of this stage in setting the tone for future financing and investor expectations.
Who Invests in Bridge Round / Convertible Rounds?
Bridge / Convertible Rounds are commonly backed by insiders, angels, or convertible-focused funds who provide quick capital ahead of a larger raise. These rounds are used to hit short-term milestones—product launches, hires, revenue goals—and are often structured as convertible notes or SAFEs. Investors are comfortable with uncertainty but expect quick conversion into equity. Notable participants include Hustle Fund, angel syndicates, and early-stage VCs seeking low-friction entry points. This underscores the critical role these investors play at this stage, offering not just capital but also confidence, network support, and early validation crucial to the startup’s trajectory.
How to Craft a Winning Bridge Round / Convertible Round Narrative
Bridge Round or Convertible Note narratives require urgency, clarity, and a credible path forward. Investors know this is a temporary roundso your pitch must explain whats changed, whats coming, and why this interim capital unlocks leverage. Youre not buying survivalyoure buying inflection. Be explicit: a customer deal is close, a new GTM motion is working, a product feature is accelerating retention. Show them that this bridge is already halfway built by your momentum. Then, make the exit plan crystal clear: when do you raise the next priced round? How will milestones justify a markup? Investors want assurance that theyre not stuck in limbo. You must prove this round is a catalystnot a crutch. Use urgency sparinglythis is about timing, not desperation. Your conviction must feel inevitable, not aspirational. Bridge rounds work best when paired with sharp storytelling, operational transparency, and short-term proof points.
Red Flags That Kill Bridge Round / Convertible Deals
Bridge or convertible note deals die when urgency morphs into panic and disorganization. Unclear justification for needing *short-term* capital or ambiguity about what specific outcome or milestone this funding unlocks makes investors recoil. Over-reliance on bridges (multiple rounds), stacking complex convertible instruments without clear conversion paths or triggers, or the absence of a credible, near-term plan to secure a priced equity round are major structural red flags. Evidence of prior funds being misallocated, a leadership team appearing overwhelmed or lacking a cohesive plan, or the absence of defined timelines and measurable milestones for utilizing the bridge capital destroys trust. If the raise feels like buying time without a concrete, high-probability plan for the next phase, the deal collapses.
How to Prepare for a Bridge Round / Convertible Round (Checklist + Resources)
Bridge rounds are all about clarity and tempo. You're not asking for lifeline cash—you're extending runway to hit a specific, near-term milestone. Build urgency around the next 3–6 months: major product drops, high-stakes hires, or key revenue deals. Your narrative must show that this capital unlocks a new valuation tier, not just survival. Be transparent with terms, timelines, and goals. Checklist: Updated short deck, interim KPIs, cap table with note structure, milestone map. Tools: Notion update docs, DocSend pitch flow, Carta bridge note tracking. The framing is key: “This is bridge capital to reach X, not to survive Y.” If you own the story, bridge rounds become high-leverage inflection points—not signals of struggle. Be proactive, not reactive. Get ahead of the market and show that you're in control.
Only active investors.
Stop Wasting Your Time
For Founders
Use our templates and components for a stunning, professional look.
100+ integrations
100+ integrations
100+ integrations
100+ integrations
For Investors
Use our templates and components for a stunning, professional look.
100+ integrations
100+ integrations
100+ integrations
100+ integrations