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Tech's Smart Money, Dumb Money and Worst of All: Malignant Money

Many venture firms style themselves as entrepreneur-friendly. Some truly are. But too often they act as though their real allegiance is elsewhere -- their limited partners, their desire to be associated with the next Facebook (FB), the hope to look smart in front of other venture capitalists. It's regrettable that TheFunded, a Yelp (YELP) for venture firms, has receded in the last few years. Hopefully we'll find new mechanisms to call malignant investors to account.  

In the meantime, entrepreneurs must beware of malignant capital. It can come with brand names, high IQs, and great Rolodexes. But unlike passive capital or the dreaded "dumb money," it can severely undermine great companies.

Dan Mindus is a FundersClub Panel Member. He is also an Investment Director at CIT GAP Funds, where he manages initial company screening, due diligence, and deal structuring. Dan serves at the board level on 15 CIT GAP Funds portfolio companies. Dan is also the Founder of NextGen Angels, an angel club for DC area investors who are 40 and younger. In 2013 Dan was included in Washingtonian magazine's list of 100 DC Tech Titans. Dan started his career at the Gerson Lehrman Group, an investment research firm in New York City. Dan holds a BA from Yale and an MBA from Harvard Business School. 

To learn more about startup investing visit www.fundersclub.com.

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At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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