Are bridge rounds usually a bridge to nowhere, or can they rescue companies and produce strong returns?

Frank Rotman · Aug 26, 2021

Most insider bridge rounds happen because the company has just generated anti-proof, making it the wrong moment to raise from a new investor

New capital is hard to attract right after surfacing evidence that something didn't work, so the company must first earn its way out of that anti-evidence before it can tell a 'back on track' story

Scope: not universally true; excludes preemptive insider rounds where the company is doing extraordinarily well or the investors want to avoid data leakage

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Jason Lemkin · May 27, 2024 · hedged

Pouring large amounts of money via safes or debt into a struggling company almost never works and those companies should be written off

He can't point to any cloud leader that had 18–24 months of 8% growth, took another $60M in safes, turned it around and made investors money

Scope: distinguishes this from a genuine small bridge round, which he needed himself as a founder

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Harry Stebbings · Mar 10, 2025

99% of bridge rounds are a bridge to nowhere

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Mamoon Hamid · Oct 21, 2024

Companies a week from running out of cash can still become public companies, so participating in distressed bridges is worth it

Box required three bridge rounds in 2008-09 because the market was dead and nobody wanted to fund a cloud storage business they assumed Google or Microsoft would eat alive

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Jake Saper · Mar 10, 2025 · hedged

Bridge rounds are not always a bridge to nowhere — some rescue companies and generate large returns on favourable terms

Intacct grew slowly and hit cash problems; Emergence bridged it on favourable terms, the company then found an accounting-firm channel motion, took off and was bought by Sage for around a billion dollars

Scope: acknowledges this is a cherry-picked example

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