FundersClub Ditches Dumb Money By Going Invite-Only

Because it's so hard to prune all those millionaires.

I'm still not convinced that you aren't better off taking "dumb money", as long as they "dumb money" investor doesn't try to act like a "smart money" investor. Maybe I'm just arrogant (OK, I know I'm arrogant, sue me) but the way I see it is: I'm the domain expert in my space, and investors are domain experts in, well, investing. So why do I want somebody who probably doesn't know anything about what we're doing in terms of customers, market, product, etc., trying to throw their weight around and shape the direction of the company?

I find myself wondering if it wouldn't be better to look for somebody who's as dumb as a brick, but hands-off. Essentially, somebody who says "here's X thousand dollars of my money, go make me more money with it".

As opposed to "Here's X thousand dollars of my money, and why don't you pivot to market 'Y', and maybe you should make this little change to the product roadmap, and BTW, I have this old buddy of mine who would make a great CTO..."

Honestly, the only real reasonable sounding argument I've heard yet for wanting involved, hands-on investors is so they can make introductions / open doors for you. But if you're relying on your investors to get you in the door of your customers, well, that sounds like a "red flag" to me.

shrug

That's not how it works, at least with angels. The expectation is usually you put the money in, and if the company needs advice or help with something they'll ask you. Feel free to give unsolicited advice but don't expect the company to bend to your will.

This is hilarious because it's right out of the ponzi playbook - financial scammers love to make their schemes invite-only since it gives clients the feeling that they're part of an exclusive club and makes them less likely to question the investment.

I doubt that FundersClub is a ponzi or even a scam in the legal sense, but it's entirely possible you'd have to be a sucker to invest and there there will be shadier imitators that are outright scams looking to pick up the people who can't get into FundersClub, especially if the JOBS Act is implemented and they can seek money from the general public.