I know, I cringed when I wrote that title but Rob Shurtleff already had "Bridges to Nowhere" taken. Rob has an Early Stage VC fund in Seattle and is a terrific person for you to know as well as read. Rob used to work at the mighty M where we worked together with the various Microsoft email products. He had ten years of that adventure.
Rob's post on bridge notes is interesting and makes many of the points you've heard before; all good stuff.
A key take away that I'd like to hammer home as well is funding to a milestone.
If you know that it is going to take $200,000 to get to a point where you can test to see if anybody will use your product or service, that's a milestone and that's a clear request for capital. You have a product/service idea and you need to get it done. The next thing is that you may find it takes $300k of marketing or whatever expense to get enough customers to conclude the product/service has legs, let's put the pedal to the metal and go full steam.
The above scenario offers up some interesting funding possibilities. A bridge note structure that might make sense is to get funding for $600k which gives you some breathing room. Many (like me) would probably advocate $1MM given the realities of time and development activities. A simple note with straight forward terms and a time horizon matching the milestones would be an ideal outcome for you.
In other words, have the cash to complete the tasks and set yourself up for the next milestone.
Rob's post is great and I'd encourage you to seek him out if you are in the Seattle area. Smart, nice, accessible. Rare but welcome combination.
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