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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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