An inside round is a funding round in which the company’s current investors provide the new capital, with no new lead from outside the cap table. Inside rounds are common for bridge financings or when market conditions make external fundraising difficult.
Because existing investors set the price, inside rounds can raise conflict-of-interest and valuation-fairness concerns. Independent board approval, a fair pricing mechanism, and pro rata participation rights help mitigate the risk that insiders set a self-serving valuation.