What’s a Bridge Round of Funding?
Startups in need of additional capital infusion to reach milestones or address financial distress may opt for a bridge round of fundraising.
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Startups in need of additional capital infusion to reach milestones or address financial distress may opt for a bridge round of fundraising.
When deciding between seeking or skipping external funding, startup founders must consider crucial aspects, such as control and scalability.
In determining distribution of equity, provisions on price, vesting, liquidation, pay-to-play, employee pool and anti-dilution are assessed.
In identifying power distribution among parties, terms on board of directors, protective provisions, drag-along and conversion are considered.
Prominent factors which investors analyze include the startup’s forecasts, product need, scope of scalability, skin in the game, as well as potential risks.
In determining the need for growth equity, a startup must assess its standing on core aspects such as explosive growth, long-term strategies and product development.
Like any company, Software-as-a-Service startups employ key metrics such as customer acquisition cost, churn rate, and runway in tracking performance.
Before fundraising, startups must first weigh team motivation, growth, negotiating power, risks, fund utilization, and other important factors.
In any investment, negotiations focus on issues and terms under two core aspects: the Economic benefits and the Control which investors gain from the startup.
Understanding terms such as valuation, capitalization table, option pool, and liquidation preference is crucial for startups when reviewing term sheets.
When pitching to potential partners, a startup must consider investors’ motivation, customer validation, and marketing strategy, while being specific and well-practiced.
In finding partners, startups should assess aspects such as investor’s fund size and timeframe, portfolio, industry expertise, and vision alignment.
Factors like terms of dilution, ESOP plan, investors’ network and domain expertise, and fund size are important for the first VC infusion.