Bijan Sabet has today’s Great VC Post titled The Inside Round. In it, he talks about the pros and cons of an inside round which he defines as:
“There are times where a follow on financing does not include a new VC firm. The new round is financed by the current investors. This is known as an “inside round”.”
He also summarizes the historical conventional wisdom:
“It used to be the case that an inside round often meant something was wrong. It meant the company was unable to raise money with a new outside lead investor due poor operating performance, team, market, whatever.
And sometimes that is a correct read on the situation.
But I believe that is no longer universally true.”
I strongly agree with Bijan. At Foundry Group, we are very comfortable with doing inside rounds and describe ourselves as being syndication agnostic. It’s definitely worth wandering over to Bijan’s blog and reading more on this thoughts about The Inside Round.