Key takeaways
- Scouts widen a fund's reach into networks its team doesn't have.
- Programs differ: some scouts invest, some only refer.
- Founders should know when a scout is acting for a fund.
How a scout program works
- Investing scouts get a small pool of capital and back companies within agreed limits.
- Referral scouts send promising companies to the fund and get credit if it invests.
- Scouts usually share in profits from their own deals rather than earning a salary.
- The fund sets rules on disclosure, conflicts and which deals scouts may take.
An example
A fictional seed fund gives five former founders $100,000 each to invest in companies at the earliest stage. When one of those companies raises a seed round, the fund's partners review it like any other deal; the scout's cheque is a signal, not a decision.
Scout deals in a fund's process
Scout and referral deals need two things recorded: where each deal came from, so the fund can see which sources work, and any conflict the scout has. Scout and referral links in Delsivo are planned for a later release; private referral links on a fund's portal are planned for the Pilot release.
Common confusions
- Scout versus venture partner: venture partners are usually part of the fund's team; scouts sit outside it.
- Scout versus angel: a scout may also be an angel, but in the program invests the fund's money.
- A scout investment does not commit the fund to a later round.