Also called: Bridge financing
TL;DR
A short-term loan that bridges a company between funding events, often from existing investors as a SAFE or note pending the next priced round.
A bridge loan provides cash to extend runway between rounds. It's most often structured as a SAFE or convertible note from existing investors and converts into the next priced round. Bridge loans are common when a company needs more time to hit milestones before the next financing.
The term is sometimes used interchangeably with 'bridge round'. The distinction is mostly contextual: 'bridge loan' emphasizes the short-term debt-like aspect; 'bridge round' emphasizes that it's a real financing.
A Series B-priced company takes a $4M bridge loan from existing investors at 10% interest, 18-month maturity, with a 25% conversion discount at the next priced round. If the next round is at $300M post-money, the loan converts at $225M effective valuation.
Bridges are negotiated with existing investors privately; they don't typically appear in the deck.
A short-term funding round between priced rounds, often a SAFE or note from existing investors, used to extend runway to the next milestone.
Y Combinator's Simple Agreement for Future Equity, a contract that gives an investor the right to equity in a future priced round, with no debt or interest.
Short-term debt that converts into equity at a future priced round, typically with a discount, a valuation cap, and an interest rate.
The number of months the current cash balance will last at the current net burn rate before the company runs out of money.
Debt financing extended to venture-backed startups, often used to extend runway between equity rounds with minimal additional dilution.
Long-form deep dives on the slides Bridge Loan most often shows up on.
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