What is a VC Scout?
Recently, there has been a lot of buzz around VC scouts and scout programs.
In light of this, we’ll be sharing stories, insights, and data from the Humblebrag community around VC scouting, the role it plays in the venture capital industry, and what it could look like in the future.
So… getting right into it, let’s start with the role itself:
What is a VC scout?
A VC scout is a person completely outside of a venture capital firm that helps them discover startup investment opportunities in return for upside.
“VC Scout” is just one way to term for this role. You could also call a person in this role a venture ambassador, startup scout, venture scout, venture capital scout, or venture partner.
Why do they exist?
Firms leverage these individuals to discover startups outside their networks. Think of it as a way for them to cast a wider net to discover startups (particularly pre-seed/seed stage).
What qualifies someone to be a VC scout?
The basic qualification to be a VC scout is to be able to introduce venture capital firms to startups they do not have access to via their existing network.
This means that the folks seeking to become VC scouts can come in many shapes and forms. A VC scout could be:
- High school student
- University student
- Startup founder
- Barista
- Co-investor from a previous deal
- Venture lawyer
- Uber driver
- Fund controller
- Emerging fund manager
- Service provider for early-stage startups
- Employee at an early-stage startup
- Conference organizer
- Super-connector
- Podcaster
- Content creator
- Meme dealer
- Meetup host
- Blogger
- Accelerator manager
- Co-working space manager
Why do people become VC scouts?
Here are some of the responses from scouts in the Humblebrag community:
- Help amazing founders that are underrepresented get access to capital
- Increase the amount of deal flow they’re seeing in a certain space
- Participate in venture capital without working full-time in the space
- Support founders in a specific sector
- Get accelerator & incubator portfolio companies access to funding
- Just want to help amazing people building amazing companies
- Grow their network of investors and founders
- Build a track record that enables them to work at a fund or raise their own fund in the next 6–18 months
How to become a VC scout?
There is a lot of capital in the market looking to be deployed and firms are now open to investing in startups in emerging tech hubs. They just need to find them. Hence why now’s a great time to become a VC Scout. Here are some ways to get started:
- Sign up for a VC scout program
- Send investors in or outside your network deal flow
- Host community events and introduce founders in attendance to investors
- Connect student founders to potential investors
- As an angel or syndicator, introduce founders to other potential investors
- Interview founders via a podcast/newsletter/blog and connect them to investors
- If you’re a founder you might know other founders who need capital or have employees that go off to start their own companies
- If you have access to different startups as an employee of a co-working space, accelerator, or incubator introduce them to different relevant funds you come across
How are VC scouts compensated?
As a VC scout, you got compensated after a venture capital firm invests in a startup you introduced to them or when said funded startup has an exit event.
After speaking to ~500 scouts, we’ve seen seven common ways they get compensated:
- Carried interest
- Upfront cash
- Monthly retainer
- Ability to invest a small pool of capital on behalf of the fund
- 1–3% of the amount invested into the startup
- Equity in the startup
- Nothing
