What a Bridge Round Is and When to Use One
A bridge round is short-term financing — typically 6–12 months of runway — raised between two priced equity rounds to extend the path to a stronger fundraise. The classic use case: you closed Series A 18 months ago, your Series B raise is taking longer than planned, you have 6 months of cash left, and you need 6 more months to hit the metrics that justify the Series B valuation you want.
Bridge rounds typically range €500K–€3M for early-stage companies, €3M–€10M for later-stage. Sources are usually existing investors exercising "inside follow-on" rather than new investors — new investors are reluctant to price a round above the existing investors' last mark without seeing the metrics that justify it.
The decision to bridge versus raise a priced round depends on three factors: how confident you are in the next-round metrics (if confident, bridge buys upside; if uncertain, a priced round at current metrics locks in a defensible valuation), existing-investor appetite (only viable if existing investors will participate), and signalling impact (a small bridge from existing investors signals "supporting the journey"; a large bridge with no new lead signals "couldn't raise externally").
Bridge Instruments
Three instruments dominate European bridge rounds.
Convertible Loan Agreement (CLA): the standard European bridge instrument. Principal accrues interest (typically 5–8% per annum), matures in 12–24 months, and converts into the next qualified financing at a discount (15–25%) and/or valuation cap. Debt-like at the legal layer — protects investors with priority claims in insolvency. See the [convertible loan agreement guide](/captable/convertible-loan-agreement).
SAFE (Simple Agreement for Future Equity): YC-originated instrument, common in UK and increasingly in DACH. Not debt, no interest accrual, no maturity date. Converts on next qualified financing at discount and/or cap. Lower legal cost than CLA but less protection for investors. See [convertible notes and SAFEs](/captable/convertible-notes-safes).
Convertible Note: US-style hybrid — debt with interest accrual but typically no maturity demand in practice. Less common in pure European bridges; appears in transatlantic rounds.
For bridge rounds where investors want downside protection (likely scenario), CLAs dominate. For bridge rounds where speed and low cost matter more than investor protection, SAFEs are faster.
Discount and Cap Mechanics in Bridge Context
A bridge converts into the next priced round at the better of two prices: the discount price (next-round price reduced by the discount percentage, typically 15–25%) or the cap price (next-round price calculated using the cap as if it were the pre-money). The bridge investor takes whichever produces more shares.
In an up round, the cap kicks in. The bridge investor effectively bought into the next round at the cap, not the headline pre-money. If the bridge cap was €15M and the Series A closes at €40M pre-money, the bridge investor's effective entry is at €15M — a 62% effective discount to the round price.
In a down or flat round, the discount kicks in. The bridge investor takes the next round price minus the discount percentage.
Standard bridge terms in Europe in 2026: 20% discount, valuation cap at "last priced round + 25% to 50%" (modest premium to the previous round to reward the bridge investor for risk). Aggressive terms: 25% discount, cap at last priced round (no premium). Founder-friendly terms: 15% discount, cap at "next round price up to 1.5× last priced round."
The Bridge-to-Nowhere Risk
A "bridge to nowhere" is a bridge round raised in the hope that metrics will improve, but where the metric improvement does not materialise. The company burns through the bridge capital, still cannot raise a priced round at acceptable terms, and faces either down-round priced equity, structured emergency financing, or shutdown.
Bridges are most valuable when there is a clear, time-bound metric trajectory that justifies the bridge: "we are at €40K MRR growing 15% MoM; in 8 months at this growth rate we are at €120K MRR which is a credible Series A; we need €1.5M to fund 10 months of operation." Bridges are least valuable when the rationale is "we need more time" without a defined metric goal.
If you are considering a bridge, write the success criteria explicitly: what metric must you hit in what timeframe to make the bridge worth raising? If you cannot articulate that, you are not bridging — you are extending runway without a strategic purpose, which is a different and harder conversation with investors. See [equity dilution](/captable/equity-dilution) for the dilution math when bridges stack.
Inside Round Dynamics and Signalling
Inside rounds — bridges where only existing investors participate — are the dominant European pattern. Existing investors are already on the cap table, understand the company, and can move fast. A clean inside round with all existing investors participating pro-rata signals strength to future external investors: "the people who know the company best are doubling down."
Mixed inside rounds — where some existing investors do not participate — signal weakness, particularly if the non-participating investors are the largest holders. Future investors will ask why. The standard answer ("fund X is at end-of-life and has no reserves") is acceptable; the unspoken answer ("fund X has lost confidence") is fatal.
External-led bridges (a new investor leads at terms that improve on the inside round) are rare but powerful. They reset the narrative: a new investor has done diligence and committed, validating the company independently of existing insiders.
Avoid extending convertibles past their original maturity if possible. A second bridge on top of a first bridge stacks discounts and caps in ways that produce devastating dilution at the next priced round. Model every bridge scenario through CAPLINK's [cap table management](/captable/cap-table-management) before signing the term sheet, and use the [seed funding](/captable/seed-funding) and [Series A](/captable/series-a) guides for context on what each priced round will look like post-bridge.