Fund Structure
Scout Program
A program where VC firms give capital to trusted individuals — founders, operators, academics — to source and invest in early-stage deals on behalf of the fund.
Scout programs allow venture firms to extend their sourcing network by arming trusted individuals with small amounts of capital ($25K-$100K per deal) to invest in promising companies. The scout invests alongside the VC firm and receives a portion of the carry if the investment succeeds.
Sequoia Capital is widely credited with formalizing the scout model. Scouts are typically successful founders, operators, or researchers who see deal flow the firm's partners might miss — early Airbnb and Stripe were reportedly sourced through scout networks.
In Practice
A Sequoia scout who is a second-time founder in the fintech space might invest $50K into an early payments startup. If the startup raises a Series A, Sequoia gets the right to lead or participate. The scout earns carry if the investment returns well.
Why It Matters
For VCs, scouts extend reach into geographies and communities they can't efficiently cover. For scouts, the programs build deal experience and carry potential. Critics argue scouts can create undisclosed conflicts of interest for founders who don't realize their friendly investor is also sourcing for a major VC.