You can see it on the horizon: profitability.
But cash is tight, and your runway might not be long enough to get you there.
One of the most frustrating moments for a founder is when you’ve proven your model, but you’re still burning cash, and raising another equity round now means giving up ownership right before your valuation inflection point.
That’s the exact situation where venture debt can help as a bridge to protitability: founders with predictable revenue who need short-term capital to cross into positive cash flow.
A bridge to profitability is a specific financing strategy used when a company is close to generating positive cash flow but needs a final injection of capital to cover operational costs until it does.
For most SaaS companies, this bridge capital supports the final stage of growth investments, like:
The goal isn’t to fund a pivot or a massive, untested experiment. It’s to support a proven model for the final push into self-sufficiency.
When you’re within 6-12 months of profitability, your valuation is about to increase signficiantly. Raising equity right before that point means you’re selling shares at a discount.
Venture debt helps you avoid that. Since it's a loan, it is considered minimally or non-dilutive, protecting your cap table and maximizing your return when you do breakeven.
This makes it especially powerful because:
A strong bridge-to-profitability candidate typically has:
If you’re still searching for product-market fit, venture debt can be risky. But if you’re simply short on time or runway, it’s one of the lowest-dilution tools available.
Let’s imagine a B2B SaaS founder, Mary.
Instead of raising a dilutive $3M–$5M equity round, Mary secures a $1.5M venture debt facility. This provides more than enough capital to reach profitability and gives Mary a comfortable buffer.
Because the company is close to generating cash, the lender offers flexible terms. Mary gets a 36-month loan with a 12-month interest-only period. For the first year, the company only pays the interest on the loan, keeping monthly payments low.
After 12 months, the company is profitable and easily able to make the full principal and interest payments from its own cash flow. Mary successfully bridged the company to profitability, avoided dilution, and kept control.
1. How do I know if venture debt is right for bridging to profitability?
If you’re less than a year from breakeven and can model a realistic cash-flow path, you’re likely a fit. Lenders look for steady ARR, low churn, and efficient customer acquisition. If the only thing standing between you and profitability is time or working capital, venture debt can close that gap effectively.
2. What happens if we don’t reach profitability on schedule?
Timelines can shift, and lenders understand that. As long as revenue is still growing, many will work with you to adjust terms. The key is transparency and early communication. Founders who plan conservatively and raise slightly more than their minimum need typically avoid this problem.
3. Is venture debt cheaper than equity?
Almost always, yes, especially this late in the growth cycle. Even with interest payments, the total cost of venture debt is often far lower than the long-term dilution from an equity round. A 1% warrant is a small price to preserve 20%+ ownership before your valuation jumps.
