In my post, Should You Tranche Your Fundraising?, I described the potential challenges associated with trying to raise a large sum of money from VCs in one round.  In sum, if the capital raise is too large you will most likely give away too much ownership in your company, or scare off the VCs because they can't meet their ownership requirements.  There's not enough of the company to go around.

There is another way.  You could raise "dumb money". 

I generally hate the name "dumb money" - it is a bit insulting after all.  As my mom would say, "It just isn't nice."  There are, however, two reasons why it has that name.  First, the phrase "dumb money" is first-and-foremost used to imply that the investors will not be able to add any value to the business beyond providing capital.  They can't offer relevant advice or connections.

Second, dumb money is often invested in atypical structures that can both 1) reduce the odds of the investor generating a risk-adjusted return and 2) mitigate the entrepreneur's ability to raise subsequent capital.  Put another way dumb money can leave your company overvalued, scaring away future investors.

A bit of irony:  dumb money rarely comes from dumb people.  More often than not the investors who fall into this category are very successful business people who simply made their money outside of the venture community (they aren't entrepreneurs, venture lawyers or early-stage investors).  As a result, they're not as connected to the venture community and don't understand how to structure early stage investments so that the entrepreneurs are poised to "stay in the system", meaning raise capital from investors that participate at various stages in the startup life-cycle.