Understanding Venture Scouts

There are very few overviews on the history and role of venture scouts. I was excited to find Ben Casnocha’s post on the topic.

Ben is a founder of firm Village Global, and while their approach to venture scouts is different in ways, this article does a good job of discussing details of scouts while being a great pitch for Village Global’s Network Leader program.

• What is a venture scout?

  • “People who are empowered to invest money in startups (usually in ~$50k increments at the seed stage) on behalf of a venture capital fund, sometimes with full decision making autonomy.”

• Sequoia Capital is credited with inventing the scout program, and Jason Calacanis was their first scout.

• The venture scout approach was taken to ensure that firms were aware of and a part of deal flow involving early-stage companies and unknown entrepreneurs. “

  • They need to be seeing seed deals because that’s today’s seed deal is tomorrow’s great Series A — it’s the pipeline.”

• Venture capital firms can’t be everywhere, but many in their network already are. the way founders socialize and develop their business ideas has changed.

  • “Thanks to online communities and social networks, founders are increasingly able to connect with fellow founders, professors, authors, or other people they know or respect. These days, when you’re brainstorming a business idea, your first stop may not be the VC’s office — and all the intimidation and nervousness that might entail. You might instead call a founder friend to ask for advice.”

  • “We believe a wide sensor network (i.e., a network of dozens of scouts) is more likely to discover a talented founder on day zero.”

• Early investing is more investing in people than it is people’s ideas. Bet on the jockey, not the horse.

  • “At the earliest stages of company formation, you’re mainly evaluating whether the founders are unbelievably resourceful and persistent, and whether they’re attacking a massive problem that, if solved, could produce a large business.”

• One topic that that’s debated: Should active founders/CEO be actively investing while their other responsibilities are more than enough the handle? I love the points made in this section, because — as someone who has served as the Growth lead at an early-stage startups — I’m sometimes asked about the time/focus impact of my mentor work and advisor roles.

  • “Myself, I don’t think working 100 hours a week is healthy or sustainable, and I don’t think it increases the odds of success. I also don’t think your team will respect you more if you work those extra 20 hours a week like a heartless robot.”

  • “What energizes me is helping out other founders on the side, not tennis games or poker nights... unless I'm playing with other founders.”