Definition
A system where VCs give small pools of capital to well-connected individuals to make investments on the firm's behalf. A brilliant way to outsource deal flow while paying in equity instead of salary.
Example Usage
He's a scout for Sequoia, which means he gets $250K/year to invest in his Stanford classmates' companies and takes 10% carry if they hit.
Origin
Pioneered by Sequoia Capital in the early 2000s, now widely adopted
Fun Fact
Many of Silicon Valley's most successful investors started as scouts, making it a popular apprenticeship model, though most scout programs have lower success rates than the main fund.
Source: Venture capital deal sourcing terminology
Related Terms
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See “scout program” in Corporate Speak, Gen-Z Slang, Pirate Speak, and more.
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