Bridge financing decision for a VC shareholder
- Segment · service
- Board & shareholder · Bridge financing
- Entities
- Zax Advisory (Zax Securities if capital is placed externally)
- Client
- Hypothetical. No real client, company or outcome.
01 · Situation
A venture investor holds a meaningful minority stake in a Series B software company with about six months of runway. Management proposes an insider-led bridge ahead of a priced round. The investor must decide whether to lead, participate or decline, and on what terms.
02 · Analysis
- Runway rebuilt from bank data and the operating plan, sized to the milestone that unlocks the next round
- Instrument comparison: convertible note vs. SAFE vs. structured bridge, with dilution under three round outcomes
- Insider vs. external lead: signalling risk, timing and execution certainty
- Investor-by-investor impact, including pro-rata rights and preference stack
03 · Options
| Option | Trade-off | Assessment |
|---|---|---|
| Lead an insider convertible note | Fast; aligned; concentrates exposure | Recommended (illustrative) |
| Participate pro-rata only | Balanced; depends on others | Considered |
| Seek an external bridge | Price discovery; slower, less certain | Considered |
| Decline | Preserves reserves; signalling risk | Not recommended |
04 · Recommendation
Lead a bridge sized to a specific milestone, with a cap and discount benchmarked against comparable bridges and a maturity aligned to the round timeline.
The client decides. A named Zax principal owns the recommendation.
05 · Execution
- Term sheet support alongside the investor's counsel
- Coordination with co-investors
- Post-close KPI monitoring in the Owner's Desk