In raising funding, bridge rounds fill the gap between the stage raises.

Startups use bridge raises for many reasons, such as preparing for the next round, increasing the runway, or covering a gap left by an unexpected event.

It’s best to position the fundraiser as a positive.

Show how the startup is doing well and is on track with the plan.

Position the bridge round as an opportunity to gain an even stronger position.

It could also be used in pursuit of an unexpected strategic opportunity that recently came up.

Avoid positioning it as a remedy for bad planning or missed forecasts.

The worst reason of all is the “we’ve run out of money”.

This shows a lack of planning and poor management of resources.

Investors will look at the cash runway of the company before investing.

If there’s less than four months of runway, they will often assume poor management to be the cause.

Make sure you launch a bridge raise in advance of a cash crunch situation.

In raising a bridge round, showcase the progress made with the previous investment.

Pursue investors who have made an initial investment but have not yet made a follow-up investment.

Consider these steps in positioning your bridge round.

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.
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Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.
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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.