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Bridge Rounds: A Sometimes Necessary Evil

As a startup, you need enough cash to last multiple quarters without laying off employees.


You also need time to get your business model proven before raising amounts from investors.


⚠️ What you need? Bridge Rounds.


They’re a financing solution between priced rounds, usually led by one of your current investors.


They’re a measure to ensure adequate cash flow to make the subsequent funding round. 


In a nutshell, bridge rounds benefit startups by:


✅ Increasing the rate of revenue growth


✅ Enable improvements in products


✅ Expand product inventory


✅ Strengthen balance sheets when leading up to acquisition


Not sure what it looks like? 


Here are 3 primary examples of bridge rounds:


➡️ Debt Bridge Financing: Take short-term, high-interest loans


➡️ Equity Bridge Financing: Get VC firms to provide financing until you raise a larger-priced round


➡️ IPO Bridge Financing: Address expenses incurred before you complete your IPO


But bridge rounds aren’t automatically successful.


To ensure that they get you what you need, observe 2 key criteria:


1️⃣ Establish your KPIs before starting a bridge round.


2️⃣ Avoid pendulum rounds by providing leeway between the bridge and the next priced round.


Need more info on bridge rounds? Then join us on Sales & Investor Accelerator where I will share these valuable resources. Join us here!

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