Venture Capital Scout
In the past, the only way to participate in the economic upside of a startup was to either become an accredited investor and invest in it or simply work at it. This was strict criteria that limited the playing field. Nowadays, angel investing is more accessible to a greater number of people thanks to venture scout programs.
With a VC scout program, you can get to participate in the value creation of companies that you help to identify as well as have the opportunity to craft your own VC apprenticeshipand utilize analysis and feedback to identify attractive investment opportunities.
What is a Venture Scout?
A venture scout is an individual that makes relatively small investments on a VC fund’s behalf. The investment amount is relatively small and the companies are usually startups or those that are at an earlier stage than the main fund. The goal of venture scouts is that the investment they make grows to become investment for the main fund.
What Are VC Scout Programs?
VC scout programs are created by VC firms. Most of these programs allow select individuals known as “VC scouts” money to invest on their behalf. The scouts have a duty to use their skills and networks to present the firm with various opportunities to invest in early-stage companies and startups.
Why Companies Offer Scout Programs?
Following are a number of key reasons why VC firms have scout programs:
• Expanding Horizons: Most VC firms want to expand their horizons. So, they use venture scouts to invest in markets and verticals that are generally outside of their typical enterprise focus. By doing this, they make sure that they maintain their position at the frontier of technology and promote new developments.
• Supporting VCs of the Future: Many VC firms consider scouts as excellent potential new colleagues. Through VC scout programs, they offer these individuals the chance to get to know the firm. With the programs, they identify the promising scouts and help them make a mark in the highly competitive venture capital industry.
• They Want to Be There First: Virtually every VC firm wants to invest their capital into the most promising startups first. They wish to grow their knowledge of a startup team even earlier, that’s why they utilize scout programs to make investments.
How Does it Work?
Venture scouting isn’t as complicated as some people think. In fact, it is relatively simple. It involves the following:
• A VC scout has a duty to identify a team and an idea that is worth investing in.
• Once the scout finds it, it’s their duty to undertake comprehensive due diligence on the startup or early-stage company, its product road map, market, technology, team, etc. and compile a report to present to the VC firm for feedback and opinions.
• Most VC scout programs give the scouts the authority to make an investment decision. So, it is up to the scout to decide whether to proceed or not proceed with the investment.
• Once the company creates dividends or exists, the returns from the investment are split with the scout.
Being a VC scout is about gaining experience in the luxuryventure capital world and contributing to your entrepreneurial community. It helps you ensure that you are better prepared when you decide to apply to your dream venture job or take a leap with your own idea. If all that sounds exciting to you, then you may be the type of person Top Venture Capital Firms are looking for. Learn more about Scout Ventures
This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.
© 2021 eculligan