What a bridge round costs a founder in ownership

What is a bridge round?

A bridge round is short-term money a company raises between two priced rounds to reach a milestone, usually on a convertible note or SAFE and mostly from investors who already own part of it. CRV, a venture firm, defines it that way in a September 2026 guide and says most bridges use a SAFE or a convertible note, with occasional priced extensions.

Bridges are one of the round types in venture deals. A bridge on a note or SAFE does not usually reprice the company, because the price of the shares is fixed later, at conversion: CRV says these instruments let a company take in money without repricing itself.

No global dataset we could read says how common bridges are, so this page gives no worldwide rate. The nearest measured figures come from Osler, a Canadian law firm, and each covers deals it completed itself. Its March 2023 report says Osler completed 30% more bridge financing rounds in 2022 than in 2021, by way of SAFEs and convertible notes; it does not define a bridge, and those deals sit outside the report’s sample of 353 preferred share financings. Its May 2026 report on 240 convertible financings from 2024 and 2025 found that in 2025 SAFEs made up 51.8% of the convertible securities issued, by number, and convertible promissory notes 48.2%.

What does a bridge round cost the founder?

A bridge round costs the founder shares at a price set later: the note or SAFE converts at a discount to the next round’s price or at a valuation cap, a note also accrues interest, and some investors ask for warrants. The terms below are medians from one law firm’s deal files and norms stated by practitioners, not worldwide averages, and each is attributed.

Term	What it does	What a source states
Discount	Converts the bridge at a lower price than new investors pay	Osler reports a median discount of 20% for both notes and SAFEs in 2024 and 2025 (financings through Series Seed); Orrick, a law firm, says German convertible loans usually carry 15% to 25%, often around 20% (September 2024); Y Combinator says SAFE discounts are commonly 10% to 20%
Valuation cap	Sets the highest valuation used for conversion	Osler: 58.3% of SAFEs in 2025 carried both a discount and a cap, against 49.2% in 2024, and so did 45.5% of convertible notes, against 57.9%; Orrick says a cap only benefits the lender if the round’s valuation exceeds the cap
Interest	Accrues on a note and usually converts into shares with the principal; a SAFE carries none	Osler: median note interest of 7.0% in 2025 and 8.0% in 2024; Orrick says it frequently sees 7% to 10% a year in Germany; UpCounsel, a legal marketplace, so a vendor claim, puts note rates at 2% to 8%, most commonly 5% to 6% (April 2025)
Maturity	The date a note falls due or converts	Osler: median note term of 24 months in 2024 and 2025; Orrick: often six months in pure bridge financings ahead of an equity round
Warrants	Extra rights that holders may ask for when a note’s maturity is extended	CRV says holders usually agree to extend, though they may ask for a lower cap, a higher rate or warrants in exchange; it gives no figure

When a note carries both a cap and a discount, the lower conversion price controls, according to Joe Wallin, an attorney at Carney Badley Spellman, who adds that the figures in his April 2026 guide are illustrations, not market benchmarks. Orrick’s German guidance adds that the discount and, in particular, the cap are usually more important than the interest rate.

The worked example below uses a 20% discount and 7% simple interest, Osler’s 2025 medians. The $20,000,000 cap, equal to the last round’s post-money valuation, is our assumption: we found no source that gives a typical bridge cap.

How much ownership does a convertible note bridge cost the founder?

A $1,000,000 convertible note bridge cost the founders between 2.23 and 3.20 percentage points of the company in our hypothetical, or between 1.62 and 1.97 points if the note’s shares are counted outside the pre-money valuation, depending on the price of the next round. The company, note and rounds are invented, and the calculation is Unmatched Capital’s own.

Before the bridge the company has 10,000,000 fully diluted shares: 5,500,000 held by the founders (55%), 3,500,000 by existing investors and 1,000,000 in the option pool. Its last priced round valued it at $20,000,000 post-money, or $2.00 a share. It raises $1,000,000 on a note with 7% simple interest, a 20% discount and a $20,000,000 pre-money cap, set at the last post-money, our assumption. A year later the note converts, with $70,000 of interest, as $1,070,000 into a priced round that raises $8,000,000. The no-bridge case is the same round at the same pre-money valuation with no note, which presumes the company lasts until the round.

The calculation must decide whether the note’s new shares sit inside the round’s pre-money valuation or outside it. We count them inside, so the existing holders bear them. Wallin’s own worked example counts them outside, pricing on pre-financing fully diluted shares excluding the converting note, so the new investors share the dilution. On that convention the founders’ loss is 1.96 points in the up round, 1.62 in the modest round and 1.97 in the down round, against the 2.33, 2.23 and 3.20 below.

Next round, pre-money	Round price a share	Note converts at	Founders, no bridge	Founders, with bridge	Founders’ loss	Note holder’s stake
$40,000,000 (up)	$3.7969	$2.0000 (cap binds)	45.83%	43.51%	2.33 points	4.23%
$25,000,000 (modest)	$2.3662	$1.8930 (discount binds)	41.67%	39.44%	2.23 points	4.05%
$15,000,000 (down)	$1.3662	$1.0930 (discount binds)	35.87%	32.67%	3.20 points	5.82%

In the up round the cap binds, and the note holder pays $1,070,000 for shares worth $2,031,324 at the round price; in the modest and down rounds the discount binds and the shares are worth $1,337,500. On our convention the founders lose most in the down round, because the same dollars buy a larger share of a cheaper company, but on the other convention the up and down rounds cost almost the same, so most of that gap is the convention. A plain conversion at the round price, with no discount or cap but with the interest, would cost 1.23 points in the up round and 2.56 in the down round; the rest of each loss is the price of the discount and the cap.

A priced extension of $1,000,000 at the last round’s $2.00 would leave the founders on 43.65%, 39.68% and 34.16% after the up, modest and down rounds, against 43.51%, 39.44% and 32.67% with the note. That assumes investors would pay $2.00, which a company short of cash may not be able to ask, and ignores anti-dilution adjustments, which we have not modelled.

Should a founder offer a cap, a discount or both?

A founder gives up the least by conceding one price term, and which one depends on where the next round prices against the cap. In our hypothetical a discount alone costs the founders less than a cap alone only if the round’s price a share is more than 25% above the cap price, and a cap alone costs less below that. Founders’ loss in points, on our convention, from the same company as above:

Terms offered	Up round, $40,000,000 pre-money	Modest round, $25,000,000 pre-money	Down round, $15,000,000 pre-money
Cap and discount	2.33	2.23	3.20
Cap only	2.33	2.12	2.56
Discount only	1.53	2.23	3.20
Neither (plain conversion, with interest)	1.23	1.78	2.56

The 25% line is the cap price divided by one minus the discount, $2.00 divided by 0.8, or $2.50 a share. The up round prices at $3.80, above the line, so a discount alone is cheaper. The modest round prices at $2.37, 18% above the cap price and under the line, so a cap alone costs 2.12 against 2.23. In the down round the cap never binds. With both terms the note converts at the lower of the two prices, so in every column the founders pay the costlier of the two, and conceding the second term costs 0.80 points in the up round, 0.11 in the modest round and 0.64 in the down round. On the other convention the line is the same and the modest round sits on it, so a cap and discount, a cap alone and a discount alone each cost 1.62 points there.

CRV, a venture firm, advises that founders do better conceding one or the other, says investors often ask for both, and says ten minutes with the arithmetic is worth it. The advice is CRV’s. The arithmetic is Unmatched Capital’s, and it shows that the right single term depends on the price the founder expects. Orrick says in its German checklist that a cap only benefits the lender if the round’s valuation exceeds the cap, which is the cap’s behaviour in our table.

Both terms together are common in practice: in Osler’s 2025 data, more SAFEs carried both than did not (see the terms table), and the text we read gives no cap-only or discount-only shares. That is early-stage convertible data from one firm’s deals, not bridge data (pre-seed versus seed covers the instrument).

The investor’s reply is fair. Bridge money goes in when the company has least room to bargain, the investor cannot know which outcome will come, and a lead asking for both terms is pricing both. A founder with weeks of cash left who accepts both terms pays the second-term cost shown in the table, whatever the next round’s price. A founder who raises with the 6 to 8 months or more of runway that Jason Lemkin of SaaStr uses as his test has room to hold out for one term, and the table shows which costs less at the expected price.

What does a bridge round signal to the next investor?

A bridge round signals most through who funds it: CRV writes that a bridge from all the existing investors reads as conviction from the people who know the company best, and that one funded only by outsiders after the existing investors passed tells the next lead that they declined to put in more (September 2026). Hustle Fund’s September 2026 guide for investors adds a caution: an existing investor may sit out because of reserve limits, ownership strategy, conflicts or fund timing, so it advises asking for the reason instead of treating non-participation as a verdict.

CRV says repeat bridges at successively lower caps cost founders the next round more often than any other pattern it lists. Jason Lemkin, founder of SaaStr, writes in an undated post that he has never seen a bridge made with a few weeks of cash left and no plan end in a win.

The academic evidence on insider money is less comforting than CRV’s reading. A 2015 working paper by Matthew Rhodes-Kropf and co-authors, listed by the Harvard Kennedy School, finds that inside rounds, in which only existing investors participate, lead to a higher likelihood of failure, a lower probability of IPOs and lower cash-on-cash multiples than outside rounds. The abstract gives no figures and covers venture rounds in general, not bridges, and it shows an association, not that insider money causes failure. Our reading is that a next lead who knows the pattern may want to see an outsider in the round.

Apart from that paper, none of these is a measured survey, and the sources differ on whether insider money reassures. They agree that the signal sits in who funds the bridge and how much cash is left when the founder asks. A founder can influence both before the next lead sees the round, through the order of the asks and when the first conversation happens.

How often is a bridge round followed by a priced round?

No public dataset we could read measures how often a bridged company goes on to raise a priced round, so this page gives no rate. The nearest measured evidence is Osler’s, from Canada, and it counts priced rounds that were completed, so a bridge that never reached one does not appear in it.

Osler’s report on 2023, covering 486 preferred share financings it completed from 2020 to 2023, found that 50% of the financings in 2023 saw convertible instruments convert at closing. Osler says companies raised bridge rounds to extend their cash runway and avoid potentially lower valuations in 2023, and that those bridge rounds were now converting as the companies returned to the market to raise priced rounds. The report excluded financings that themselves issued convertible securities. A conversion at closing shows that an earlier convertible existed, not that a bridge caused the priced round.

Osler also links the timing of down rounds to bridging. In its report on 2022, 7% of all financing rounds were down rounds, and Osler said it believed reliance on bridge financing strategies correlated directly with the lack of down rounds that year. Its 2025 report puts the down-round share at 15.9% in 2023, 14.7% in 2024 and 11.3% in 2025. The correlation is Osler’s belief, not a tested cause.

What do existing investors ask for when asked to put in more?

Existing investors asked to fund a bridge look for information and price protection, and sometimes a claim on the next round: Jason Lemkin of SaaStr describes the information founders should give, and CRV the price and pro rata terms.

On information, Lemkin tells founders to put the Zero Cash Date in every monthly update, and notes that venture funds hold limited reserves, mostly used for up-rounds led by new investors, so an existing investor may not have the capital to say yes. On price, the ask is a cap and a discount together, as above, and, when a note’s maturity is extended, a lower cap, a higher rate or warrants. CRV adds that existing investors can claim pro rata rights in the next round before a new lead builds its ownership.

The Holloway Guide defines a pay-to-play provision as a term requiring investors to take part in later rounds pro rata when the company asks, with penalties from losing anti-dilution protection to having preferred stock converted to common (guide updated September 2023). In a sample of 150 pay-to-play provisions that Gad Weiss of the NYU Pollack Center for Law & Business hand-collected from US startup charters, slightly more than half applied to down-round financings, and boards could often trigger or disarm them (May 2025). For an existing investor, such a clause can attach a penalty to declining, and whether a particular bridge triggers one depends on its wording.

What changes for a UK company using an advance subscription agreement?

A UK company raising a bridge from investors who want EIS or SEIS tax relief can use an advance subscription agreement, or ASA, in place of a convertible note, because UK law firms say a convertible loan cannot carry that relief. Michelmores wrote in April 2020 that conversion of a loan into shares does not qualify for SEIS or EIS, and that EIS relief is not currently available where a loan or convertible loan is provided. SEIS is narrower: HMRC’s guidance on GOV.UK says a company cannot use it if it has received investment through EIS or from a venture capital trust, and that gross assets must not exceed £350,000 when the shares are issued (page updated May 2023).

An ASA is not a loan, so it carries no interest and cannot be refunded. Michelmores says the share price is typically the lower of a price agreed between the parties and a discount of 10% to 30% to the next qualifying round, and that ASAs suit funding before or between more structured rounds. Kingsley Napley, a law firm, advises the company to include a valuation cap so existing shareholders know the likely dilution, and notes that the agreement must not give the investor other benefits, such as investor protections, if relief is to stay available. That limits what an existing investor can ask for inside an ASA, compared with the list above.

The constraint on a bridge is time. Both firms give a long-stop date of no more than six months, Kingsley Napley says the investment converts automatically at that date, and Michelmores says HMRC has clarified the six months and that before January 2020 up to 12 months was typical. HMRC’s Venture Capital Schemes Manual page on EIS and ASAs (VCM12025, updated 29 October 2026) says HMRC expects a long-stop of no more than six months from the date the ASA is entered into, and is unlikely to give advance assurance for a longer one. A longer long-stop does not of itself make the investment ineligible once the shares are issued and a compliance statement is submitted.

The same page says an ASA must be one that cannot be varied, cancelled or assigned, and that HMRC will not give further assurance on proposed changes after an assurance has been given. A note’s maturity can be extended by agreement; an ASA cannot be varied, so a company cannot count on extending the long-stop if the round slips. That is Unmatched Capital’s reading of the page, which does not discuss extensions directly. EIS carries further conditions on the shares, the investor and the company that this page does not cover. The law-firm pieces are dated 2020 and 2021, so a UK company should confirm the current position with a UK corporate lawyer.

How do bridge rounds work in Canada, Germany and other markets?

Bridge rounds in Canada and Germany are built from the same parts as a US note, a discount, a cap, interest and a maturity, but the instruments, the usual terms and the formalities differ. Orrick, a law firm, wrote in September 2024 that convertible loans have become the go-to financing instrument in German venture capital for short-term and bridge funding, and that in pure bridge financings ahead of an equity round the term is often six months. The safest way to sign is to notarise the agreement, Orrick says, citing a decision of the Zweibrücken Higher Regional Court on the lender’s signature.

Market	Instrument in the sources	Time limit or term	Kind of source
UK, where EIS relief is wanted	Advance subscription agreement	Long-stop of no more than six months expected by HMRC	Tax authority’s manual (October 2026)
Germany	Convertible loan agreement	Often six months in pure bridge financings	Law firm’s description of practice (September 2024)
Canada, in Osler’s deals	SAFE or convertible promissory note	Median note term of 24 months in 2024 and 2025; a SAFE has no maturity date	Law firm’s measured medians (May 2026) and Y Combinator

The table compares unlike things: Osler’s medians cover early convertibles of every purpose, with bridges one use among others, and Orrick describes German practice without a dataset.

For companies outside the US, Y Combinator publishes valuation cap versions of its SAFE for companies formed in Canada, the Cayman Islands and Singapore, tells founders to consult a lawyer licensed in the relevant country before using them, and says its Send a SAFE tool supports only US-incorporated companies. No source we read covers bridge terms in other regions, so this page does not describe them. A founder anywhere else needs a local lawyer’s read of the instrument before anything on this page applies.

What should a founder or an existing investor check before agreeing to a bridge?

A founder or an existing investor weighing a bridge can test it by pricing it at three next-round prices, up, modest and down, because which single term costs less reverses between outcomes. The founder’s questions:

1. Have the existing investors been asked first, and can a new investor join them? CRV says outside-only money after existing investors passed is read as a refusal, and the inside-rounds paper above associates insider-only rounds with worse outcomes, so on our reading the strongest bridge has both.
2. Is the plan realistic and early? Lemkin’s test is a plan shared with 6 to 8 months or more of runway left, not a last-minute request with a few weeks of cash.
3. Which single term is being offered, the cap or the discount, and does the next round plausibly price more than the cap divided by one minus the discount? In our example a discount alone is cheaper only above that line.
4. Does the note mature before the round could plausibly close? CRV says holders usually agree to extend, though they may ask for a lower cap, a higher rate or warrants in exchange.
5. Outside the US, does the local form fit the plan? HMRC expects a UK advance subscription agreement to have a long-stop of six months or less, and the agreement cannot be varied, a German convertible loan agreement is safest notarised, and the Canadian, Cayman and Singapore SAFE forms need a local lawyer’s read.

The existing investor asked to put in more can ask the same questions from the other side: what the cap is against the last post-money, whether the other existing investors are taking their share and, if not, why, whether the company’s charter carries a pay-to-play clause, and what the company’s Zero Cash Date is. None of this is investment, tax or legal advice, and the conversion terms should be read by a lawyer qualified in the company’s jurisdiction.