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.
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