Forget “Smart” and “Dumb” Money; Find “Calm” Money

You’ve maybe heard the terms “dumb money” and “smart money.” If this is your first rodeo, “dumb money” refers to capital from investors who provide nothing but the cash, ie. they have no experience or connections in your industry, while “smart money” comes from investors who can offer you their rolodex and years of experience in addition to their funds. 

Unfortunately, smart money is by and large a myth. And there’s a few reasons for that:

  1. Investors, and especially good investors, know that their job is to invest, not manage the companies in which they’ve invested. Sure, they might forward an email for you or answer specific questions if they know the answer. If they’re on your board, you’ll even get a half day of their focus every two or three months. But for eight hours a day, every day, they are taking meetings with new companies and evaluating that deal flow. Once they’ve completed that process with you, they expect you to do the hard work, with limited interactions. 
  2. Smart money can be distracting. Having advisors can be wonderful — they know things that you don’t and you can tap their shoulders for help or a sounding board. But beware the “smart” angel investor who is otherwise retired and makes a couple of investments each year. That dude is often looking for ways to feel productive and will pepper you with feedback and suggestions. This in itself isn’t terrible, but given that he just wrote you a check… don’t be surprised when you get the email asking why you haven’t done this thing he suggested last month.
  3. Often, it’s not actually “smart” money. There’s a subclass I like to call, “look, I’m smart” money. You most often see this in angel clubs. Quite often, the 20-100 people in those clubs are more interested in showing each other how smart they are by asking arbitrary and irrelevant questions of founders in an attempt to stump you. Instead of the three-to-five hours you should spend on any single investor while closing a pre-seed round, you’ll often spend 80 or more hours on questions you really have no idea how (or need) to answer. 

If you haven’t already figured it out, “look, I’m smart” money is even worse than dumb money, and the minute you get asked about your projected marketing costs in Year Four when you haven’t launched your product yet, run. Run far, far away.

But even worse than “look, I’m smart” money is “stressed” money. And better even than the smartest money is CALM money. What is calm money, you ask?

Once, at a board meeting for OneTrueFan, the exec team presented a deal we’d been working on for weeks that had the potential to be worth several million dollars. We had serious traction, and were pretty excited about it. Our board member Rob Hayes (from First Round Capital) responded to our enthusiasm with something like “cool, keep me posted.” After the meeting ended, my co-founder and I cornered him and asked him why he wasn’t doing backflips off the table. 

I’ll never forget what he told me. “Eric, I’ll give you two options. I’ll be excited now, and if it doesn’t happen, I’ll be really, really upset. Or, I’ll be calm about it now, and when it happens I’ll be over the moon.”

And, surprise, our big deal never happened.

Rob is the epitome of calm money. A few months later, when OneTrueFan was running out of runway, Rob was chill as hell. He told us he expected us to do our best, find an exit, but above all act with integrity. Other investors, however, acted as if they’d given us their last dime. We got phone calls every two days from an investor who was in dozens of companies, yet acted like he was depending on us to feed his children. You can guess which of our investors I remember fondly, and which ones still can make my blood pressure rise.

Calm money recognizes that once you’ve made an investment, you mentally write it off and hope for the best. Stressed money rides you roughshod and brings everyone down with their negative energy. When you’re raising capital, look for the calm money. 

To be sure, it’s not the easiest trait to identify. But when something unexpected happens in negotiations, and something always happens unexpectedly, some investors will remain unfazed, and some will get stressed out. Look for the people who make everything as painless as possible, and if you have a choice, go with them. 

If you focus on “smart” money, you may find it. And it could come back to bite you. Because it’s a guarantee, like death and taxes, that every startup will go through challenging periods. There are apocryphal stories of investors stepping in at the last minute to make an intro that saves a startup that eventually turns into a unicorn. Those are STORIES. They might happen on occasion, but there’s no way to optimize for them. On the flip side, every time a startup goes through the shit, there’s potential for an investor to make it ten times worse, and sometimes they do. So optimize against that. Optimize for calm money. 

And, if you’re reading this and thinking, “But Eric, I REALLY need someone who can make intros for me and help me work through problems,” well, get a coach. Find an advisor or a mentor in your industry. Join an accelerator. TechStars is great for that. 

At the end of the day, the people responsible for the success of your company are you, your co-founders and your employees. Not a mythical investor who will do the difficult work of early sales. That’s a fantasy, and it’s not how it works. If you’ve read anything else on this blog, you should realize by now that not only does it not work that way, it SHOULDN’T work that way. Do your work. Let investors do theirs. And neither of you should get in the way of one another. 

— Eric Marcoullier

Fundraising can be a pain in the ass. Scratch that. Fundraising *is* a pain in the ass. When you’re raising your Pre-seed or Seed Series round, you’re raising as much on vision as you are on track record. But you ARE NOT asking for a donation, a handout or a favor. You are offering an investor the opportunity to go for a ride that you both believe will end with the investor making a pile of money. If you’d like to talk about how to frame your startup that way, drop me an email at or check out my coaching site at

(Photo by Anthony DELANOIX on Unsplash)

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