Bridge Fund

Back to Atlas

The Bridge Fund is a co-investment fund launched by the Cordoba Agency for Innovation and Entrepreneurship ("Agencia Córdoba Innovar & Emprender") designed to facilitate startups in raising bridge rounds.
What are the main aims and objectives?
The Bridge Fund, with the support of the private sector, aims to encourage risk investment in Cordoba-based startups. Objectives of the program include allowing them to access bridge rounds, scale regionally and access new pre-series and series A rounds. The program is a response to the significant challenge Argentinian startups face accessing finance in the scaling up stages. Only a small percentage of startups that manage to raise their first pre-seed round are subsequently able to reach new rounds of capital. This issue is compounded by the low pre-seed investment tickets, which typically range from $30k to $50k in comparison to more advanced entrepreneurial ecosystems with investment tickets of around $250k. 
How does the program work?

The "Bridge Fund" program: 

  1. Enables startups to access bridge rounds, while also promoting fundraising and encouraging follow-on investments in startups that have already received investment from the Agency.  

  1. In order to participate in the program, the Agency takes equity according to the percentage established by the venture capital (VC) firm, which is used as a basis to calculate its proportional participation. Additionally, the Agency utilizes the valuation and due diligence conducted by the VC firm to reduce risk and replicate best practices. 

  1. Through the Bridge Fund program, the government has a tool that enables it to partner with startups experiencing exponential growth. This partnership increases the chances of success for these startups and provides the government with an opportunity to generate long-term returns on its investment, which can be used to support new startups in the future 

Beneficiaries of this program will receive the following benefits, subject to the following conditions: 

  • In exchange for payment, the startup will issue the Agency with the right to certain shares of the startup’s capital stock. The money contribution will be granted for a maximum period of 24 months. 

  • The VC’s contribution must represent at least 150% of the amount granted by the Agency, up to the investment limit provided by the beneficiary. 

  • The money contribution will range from 100 to 200 thousand per startup, depending on the VC's investment.  

  • Contributions received by the startup may be used to meet expenses directly related to the expansion investment plan presented at the time of admission to the program. 

This program is intended for scaling startups that are established legal entities, located in the Province of Cordoba, and have previously received co-investment from the Agency in the pre-seed stage through one of its programs, as well as angel investors or venture capital institutions (VCs). 

To qualify for the program, the startup must be in a regional expansion stage and have an active investment round with at least one commitment from one or more private investors. These investors must be VCs -from any country-, and must contribute a minimum of $1.5 for every $1 contributed by the Agency. 

What is the overall cost?
The total budget for the pilot scheme in 2022 was $500,000. The general annual budget from 2023 onwards is $1,000,000.  
What impact has been measured?
The Bridge Fund program is a very recent policy initiative that has not yet been assessed for its impact.  
What lessons can be learned?

The Bridge Fund program is expected to produce several positive outcomes, such as: 

  • Increasing the number of regional startups that successfully raise new rounds of capital, including pre-series rounds and series A rounds of more than USD 1 million. 

  • Facilitating access to bridge rounds for startups based in Cordoba, where historically, only 10 bridge rounds and around 15 series A rounds have been registered in the past 10 years. 

  • Co-financing at least 5 startups per year in the bridge stage, in partnership with VC´s. 

  • Changing the mindset of entrepreneurs who are willing to receive investment from the Agency in exchange for equity, as well as changing the state's mindset to participate in the success of the projects in which it invests. 

  • The current challenge is to scale up the program and launch a call to finance at least 5 startups per year, creating a greater impact on the startup ecosystem in the region. 

CURATED BY

Pablo Ignacio Peralta

Director
Agile Policy
Argentina