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Scout

In startups and venture capital, a scout is a person who helps investors source new deals.

A startup scout is a person who identifies promising companies in order to invest early stage capital.

Scouts are usually junior partners of venture capital firms and have limited resources.

Their job is to find companies whose products or services have the potential to be hugely successful, but which have not yet been widely adopted.

A scout makes small investments on behalf of a VC fund without requiring much involvement from the rest of the team. The check size is smaller and the companies are at an earlier stage than the main fund.

The goal is that the scout investments will grow to become investments for the main fund. And the hope is that the GP will have an inside track on leading that investment.

The process of identifying startups goes through many steps. First the scout identifies opportunities from their network and from publicly available sources like tech blogs, conferences, etc. The scout then performs due diligence by collecting information about each opportunity and eliminating those which don't meet their investment criteria.

To find new startups a scout may spend a lot of time searching for startups with a good idea, team and market opportunity by reading tech blogs and news websites regularly, attending tech events, in addition to talking with friends and family members.

Other Terms

Investment Memo

An investment memo (also known as a deal memo or deal memorandum)is a crisp and clear way to layout and pitch your company to potential investors. Memos are a clear and concise document to lay out strategic vision, rationale, and expectations for an investment, project, product or strategy.

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Venture Capital

A venture capital firm is usually a private partnership that are funded by wealthy individuals and organisations. Larger investment banks, pension funds, and even university endowments also invest in VC firms. In some cases, companies themselves provide capital to VC firms.

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Angel Investor

An angel investor is considered to be high-net-worth individuals who invests their own money (i.e., funds from their personal savings or from capital that they have earned from the sale of other business interests) in startups and small, growing firms.

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Investment Allocation

The investment allocation is the portion of the total round that is set aside for a specific investor. This is usually communicated in dollars but can be expressed as a percentage of the total round. For example, 100,000 or 14% of the round.

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Startup Accelerator

A startup accelerator program provides startups with financial investment, education, mentorship and networking that can help transform their early-stage companies into a successful business venture.

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Accredited Investor

An accredited investor is a person or group with enough wealth to be able to make certain types of investment.

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Venture Partner

A person, usually loosely associated with a venture capital firm, who helps the firm source new deals, find new limited partners, evaluate incoming startups, or help startups in the portfolio.

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Scout

In startups and venture capital, a scout is a person who helps investors source new deals.

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