What are the pros and cons of raising a bridge round versus a Series B round?

1 Seed stage

The seed stage is the earliest stage of venture capital funding, where you have an idea, a prototype, or a minimum viable product (MVP). You need money to test your product-market fit, validate your assumptions, and grow your user base. The typical sources of seed funding are angel investors, accelerators, incubators, and crowdfunding platforms. The average amount of seed funding is between $10,000 and $2 million, and the valuation of your startup is usually based on your potential, not your revenue.

5 Pros and cons of a bridge round versus a Series B round

Raising a bridge round versus a Series B round can have different advantages and disadvantages for your startup, depending on your situation and goals. For instance, a bridge round can be faster and easier to raise than a Series B round, as it involves fewer investors, less due diligence, and simpler terms. This can save you time and resources, and allow you to focus on your core business. Additionally, a bridge round can be less dilutive than a Series B round, as it usually has a lower valuation and a higher conversion discount. However, it can also be riskier and more expensive than a Series B round, as it implies that you are not ready or able to raise a Series B round, and that you need more time and money to reach your milestones. This can signal a lack of confidence, traction, or growth to potential investors, and affect your reputation and valuation. Moreover, a bridge round can create more pressure and uncertainty for your startup, as it is usually a short-term solution, and not a guarantee of future funding. You will still need to raise a Series B round eventually, and you will have to meet higher expectations and criteria from investors, as well as deal with the conversion of your bridge round into equity.