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Personally, I wouldn't touch 'em with a ten foot pole, as either an angel or an entrepreneur. I'm watching a friend's startup get flushed down the toilet by th

• grellas 17y ago
  Though my main comment stresses the benefits of these bridge notes, there is no question that they carry risks and are not to all tastes - they are, after all, true loans, which means that a company can go down if it can't do a timely first funding and the bridge investors demand repayment. Founders should think carefully before using this solution and, in most cases, unless a more substantial funding is truly anticipated not too far down the road, should probably not use it. Part of this depends on how "friendly" the bridge investors are. You can afford to use bridge notes a bit more loosely if the investors are friends and family or angels with whom you have a strong relationship. These investors will likely team with you and adjust their deal to meet continuing needs if things don't go as expected. This likely will not be true of potentially-not-so-friendly angels with whom you have no special relationship. Of course, creative forms of equity compensation can be excellent vehicles because they cut the cash needs of a company dramatically. There are obvious limits to this, though, as other cash needs will arise as well in most startups.