Bridge financing is temporary funding used to cover a company's needs between two major financing events — for example, between a Series A round and a Series B, or between a late-stage round and an IPO. It is designed to 'bridge' the gap when a company needs cash but is not yet ready to close its next substantive round.
Bridge loans are typically structured as convertible notes or SAFEs and carry a higher interest rate or discount to reflect the short-term, higher-risk nature of the capital. In Southeast Asia's start-up ecosystem, bridge rounds are particularly common for companies extending their runway while finalising term sheets from institutional investors.