Ouch! Money, how can you be so dumb?

Startup bubble, this bubble, that bubble. Burst! Whatever that is, it’s a myth created by some wannabe tech foreigners who are dumping “dumb money” into the startup sphere. It’s a check for you and usually an ego boost for the so called wannabe investor. A mistake that got so frequent that it actually has a name. Dumb money, I’m talking about.

Om Malik tweeted his sentiments the other day. It’s usually a foreign investor looking to park money somewhere safe. This guy has no startup experience and is just wanting to put cash into a quirky idea for short term returns. More on the profile he’s 50 something and has no clue why snapchat and all this startup hustle on internet is a hit. Or more likely it’s a trust fund brat digging deeper into family’s wealth.

Image Credit: Pexels

Look, dumb money has no relation to a person’s knowledge. Even the smart money makes dumb decisions. It’s more about the ability to act on something and the right access. Infact dumb money is increasingly treasured by entrepreneurs tired of lengthy term sheets, due diligence and the games of more established VC’s and funds.

Elizabeth Taylor’s quote “If someone’s dumb enough to offer me a million dollars to make a picture, I’m certainly not dumb enough to turn it down” explains the situation of startups eagerly lapping up investor appetite.

Irrespective of weather situations, growing a garden that will always bloom does take lots of continuous hard work, but at some point you have to let the plants grow. If you have a plan, let it work. But don’t just do something, stand there. Stop long enough to ask yourself if your decision is based on how you feel or what you know or what is going on in the market. Answer yourself if your decision is based on an investment plan (for the funds you actually need) when you were thinking clearly.

If you’re convinced enough that you need to raise, take a mandatory timeout. Write yourself a letter that explains what you intend to do and why. Pretend like you are trying to convince a wise friend that your proposed course of action makes sense. It might help to actually meet with someone you trust and talk it through. Putting it on paper can help you weigh knowledge versus emotion to firmly decide if your business needs OPM (other people’s money) to grow.

I know, I know. Believing that we can remove all emotion from our decision making just isn’t realistic. But we can still take plenty of steps to make knowledge the foundation of our financial choices. To lift your sagging spirits, though, here is an Erica Jong quote, “You see a lot of smart guys with dumb women, but you hardly ever see a smart woman with a dumb guy.” Maybe, you can replace `women’ with `money’ in that line, to explain why your money isn’t as smart as you’d like it to be. I wish the so called dumb money was smart enough to know that it’s dumb.

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