Running out of runway between rounds is one of the most stressful positions a founder can find themselves in. You’ve got growth to chase, a team to pay, and a clear picture of where you’re headed – but the timing between your last raise and your next isn’t cooperating. This is what most people call the funding gap, and it’s more common than founders tend to admit.

The good news is there are more options available than you might think. Here are six practical strategies UK founders use to bridge the gap without stalling the business or giving up more than they need to.

Revenue-Based Financing

Revenue-based financing (RBF) lets you access upfront capital and repay it as a percentage of your monthly revenue rather than through fixed instalments. Repayments flex with your performance – when revenue dips, so does your repayment obligation.

The main appeal for founders is that there’s no equity dilution. You’re not selling a slice of the business or resetting your cap table ahead of a raise. RBF works best for startups with predictable, recurring revenue – SaaS businesses and subscription models tend to be the strongest candidates. UK-based providers like Clearco and Capchase operate in this space, and it can often move significantly faster than a traditional equity round.

Bridge Loans and Convertible Loan Notes

Bridge loans are short-term financing instruments designed to cover the gap until your next round closes. In the UK, these most commonly take the form of a Convertible Loan Note (CLN) – the standard bridging instrument for UK startups and one that’s generally preferred over US-style SAFEs, which don’t carry the same legal footing under English law.

A CLN allows the lender to convert the outstanding balance into equity at your next qualifying round, typically at a discount to the round price. This can work well for both parties – the investor gets a better entry point, and you avoid setting a valuation before you’re ready to do so credibly.

One important point for UK founders: if you hold SEIS or EIS advance assurance, structuring a CLN incorrectly can jeopardise investor relief eligibility. It’s worth getting the terms reviewed before you issue any notes.

Venture Debt

Venture debt is typically available to startups that have already raised equity and are on a credible growth trajectory. Unlike a bridge loan, it’s structured more like a conventional loan with interest payments and a fixed repayment schedule, often with warrants attached to give the lender some equity upside.

The key benefit is that it extends your runway without further diluting the cap table. If you’re twelve months from a Series A, for example, venture debt can cover that period and give you time to hit the metrics that will justify a stronger valuation. UK-active providers in this space include Kreos Capital and TriplePoint Venture Growth. Expect lenders to look closely at your existing investor backing and growth trajectory before committing.

Advanced Subscription Agreements

Advanced Subscription Agreements (ASAs) have become increasingly common at pre-seed and seed stage in the UK as an alternative to CLNs. An ASA is essentially a forward contract – an investor pays now in exchange for shares at a future round, typically at a discount.

Unlike CLNs, ASAs aren’t debt and don’t sit on your balance sheet as a liability. That makes them cleaner from a financial reporting perspective and simpler to explain to subsequent investors. The British Business Bank’s Future Fund used ASA-style structures during COVID-19, which helped push the format into the mainstream for UK startups. If you’re at an early stage and want to raise bridge capital without the complexity of a loan instrument, an ASA is often the more founder-friendly route.

Equity Crowdfunding

Equity crowdfunding is a well-established route in the UK, with Crowdcube and Seedrs operating as the two dominant platforms. Done well, a crowdfunding round can raise meaningful capital, validate your product with a broad audience, and turn your customer base into shareholders who have a personal reason to want you to succeed.

It works best for consumer-facing businesses with a compelling product and a story that resonates at scale. Crowdfunding isn’t a quick fix – a well-run campaign requires significant preparation – but it can sit alongside a lead investor round rather than replace it, and the market validation signal it provides can strengthen your next institutional raise.

Strategic Partnerships and Advance Payments

One of the most underused bridging strategies is securing advance payments from existing or prospective customers. If you’re selling to enterprises or larger organisations, negotiating an annual upfront payment rather than monthly billing can meaningfully improve your cash position without involving external investors at all.

Strategic partnerships can serve a similar function. A partner with a commercial interest in your success – a supplier, a distributor, or a complementary business – may be willing to provide capital in exchange for preferential terms, exclusivity in a market segment, or future equity. The capital is non-dilutive at the point of receipt, and the relationship adds strategic value well beyond the initial cheque.

Bridging the funding gap rarely looks the same twice. The right strategy depends on your stage, revenue profile, existing investor relationships, and how far you are from your next raise. What matters most is exploring your options early – before the pressure becomes acute.