I'm not sure how the leaps from "price-sensitve" to "smart money", and "price-insensitive" to "dumb money" were made. I think it's much more accurate to divide

I'm not sure how the leaps from "price-sensitve" to "smart money", and "price-insensitive" to "dumb money" were made. I think it's much more accurate to divide it amongst "price sensitive" and "value sensitive" investors. Yes, there's still classifications such as "dumb money" and "smart money", but they're often misused when discussing topics like this. And I've yet to see any posts on early stage val's of the biggest companies in the past few years, which could explain how "smart" or "dumb" either is. I also haven't gone through the presos of funds of both types to see who's getting the best returns, but I can remember anecdotally that both classes of investors had had success. (Kauffman Foundation would have some good data on this.) I will say that one nice thing about pricing on the higher side is it requires more conviction on the part of your investors. Thus, it will be those that are committed to your company, despite a higher relative price. (All investors are price-sensitive, it's just to what degree.) So by pricing it higher you end up with the same result as CZ and DS are seeking, except you keep more of the company. And as far as the price-sensitive, there are many reasons, aside from them just being "smart": a) they're trying to raise a fund and need lower valuations, "better" numbers, for potential LPs (since LPs are usually investors with a more traditional mindset on finance, and thus more price-sensitive), b) their existing investors want to see lower valuations, "better" numbers, c) they're able to get "good deals" (I'm not mocking this, I'm just noting it's a value judgement, not something concrete) at lower valuations, d) they care more about potential multiples on their own fund(s) more than investing in the outright best companies, and any number of other reasons. Hunting for the cheapest relative startup isn't necessarily "smart" (nor is investing in say uncapped notes), and investing in "expensive" startups isn't necessarily dumb (nor is haggling over price).