My impression is these people aren't hypothesis driven. The smart money seems to look at things and say, "I think the world is going to need disintermediation, curation and retribalization, and leapfrog technologies for emerging markets. You either sustain an existing customers business model or you disrupt it, and our business is providing air cover to the latter, and using the former as a hedging instrument." It's a technology macro view. Dumb money says, "we provide growth capital for key technologies that support national sector x, y, z." Straight micro mandate.<p>From my armchair, I'd assert the difference is smart and dumb money can practically be defined by those with a hypothesis vs. those with a mandate.<p>A state fund could be smart money, but they would need a lot of freedom to do it - or find funds/funds-of-funds that had the freedom for them, which is what pensions do today. I wonder whether most governments could handle the political risk of the losses from a real VC fund, because the losses just look like slush funds for connected managers.<p>Not to dump on them, I think some sovereign wealth funds and even treasuries could benefit from being run more like aggressive pension funds, but the trouble with government is there is no way to clear off the project barnacles that attach to anything with momentum. Maybe they will do it differently.