Bridge Round
Interim financing between priced rounds, usually convertible.
Definition
A bridge round is short-term financing - typically a convertible note or SAFE - that extends runway to the next priced round or a defined milestone. Bridges are often structured as convertible notes or SAFEs from existing investors. They work best when there is a near-term, credible milestone, such as an FDA decision or trial readout. Repeated bridges without progress can signal trouble and make later fundraising harder.What this means in practice
Bridges are common in MedTech to span trial enrollment delays or FDA review timelines. 'Bridge to nowhere' is the cautionary phrase: bridges without a clear next milestone often become recapitalizations.Examples
- A startup secures a bridge round to fund an unexpected extension of its pivotal clinical trial, ensuring it can generate sufficient data for its FDA Pre-Market Approval (PMA) submission.
- A MedTech company uses a bridge round to cover increased operational costs while awaiting a Notified Body’s review of its technical documentation for CE Mark under the EU MDR.
- A cybersecurity firm providing solutions for medical devices obtains a bridge round to complete a critical penetration test and security audit, fulfilling a key requirement for its regulatory compliance.
- •Confusing a bridge round with a long-term financing solution can lead to inadequate planning for future funding needs and potential disruptions to regulatory timelines.
- •Failing to clearly define the milestones a bridge round is intended to achieve can result in a "bridge to nowhere," jeopardizing the ability to fund essential regulatory activities.
- •Inadequate due diligence regarding the terms and conditions of a bridge round could introduce financial constraints that impact investment in critical quality, regulatory, or cybersecurity infrastructure.
- •Underestimating the time and resources required to achieve the milestones funded by a bridge round can lead to subsequent financial crises, potentially affecting product development and regulatory approval processes.
- •Poor management of bridge round funds might result in insufficient capital for essential compliance activities, such as clinical data collection or post-market surveillance.
Frequently asked questions
Related terms
Grouped by themeEditor's picks
· Hand-selected related conceptsShort-term debt that converts into equity at a future financing round.
Months of operating cash a company has before running out.
Convertible instrument that converts to equity at a future priced round.
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Adjustment that protects investors if the company raises a future round at a lower price.
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Where this term appears across MedTech Terms.
Sources
3 sourcesSources support the definition or relevant regulatory context, not necessarily every claim on this page. Each is graded against our source-tier hierarchy so you can see what rests on binding law versus commentary.
- 1SVB: bridge financingTier 4 VerifiedSVBsvb.com
- 2PitchBook - MedTech CoverageTier 4 VerifiedPitchBookpitchbook.com
- 3NVCA Model DocumentsTier 4 VerifiedNVCAnvca.org
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