Whats the difference between smart money and dumb money?
from Venture Hacks Summary: Smart money is money plus the promise of help that’s worth paying for, dumb money is money plus hidden harm, and mostly money is mostly money. Weed out the dumb money with diligence. Evaluate supposedly smart money with the smart money test. Finally, assume your investors are mostly money: unbundle money and value-add to get money on the best terms possible and value-add on the best terms possible. If smart money is money plus the promise of help that’s worth paying for, thendumb money is money plus hidden harm, and mostly money is mostly money. All three provide what entrepreneurs primarily want from investors: money. • Avoid dumb money: you don’t hire harmful people—so don’t marry them for the life of the company either. • Most investors are mostly money but very few of them act like their primary contribution is capital. They spend too much time selling you on their value-add and not enough time getting you a quick yes or no. • Smart money is rare—after a
