How are VC Scouts compensated?

As a VC scout, you will come across different types of compensation or pay based on the scout program(s) you are part of. I've come across 4 different startup scouting compensation styles:

Cash on deal completion

Some scouting programs will compensate you in cash after the deal is completed. The cash may be proportional to the total amount invested but doesn't have to be. It comes down to the scouting program's terms and conditions.

Cash for relevant intros

Other scouting programs will pay you a small cash amount whenever you introduce them to a startup that  matches the investor's criteria. Note that the introduction goes beyond being just a cold and will likely involve some level of a warm introduction as well as basic due diligence to ensure that the startup meets the venture capital firm's investment thesis. This would be more common if the venture capital firm sends you out on a mission to find certain startups that meet certain criteria in a particular geography. You can expect that amount to be less than the cash you earn when deals are completed.

Startup equity proportional to the investment

In some cases, as a result of facilitating a VC investment deal, you are allocated a percentage of the VC's share ownership. The actual details of how this is implemented can differ from program to program. For example, you might hold stocks under your name and listed on the startup's cap table. Or in other cases, you may be offered a contractual promise that guarantees a share of the overall investment returns when the startup exists (which may be as far out as 7 to 10 years).

Your own micro-fund

In other cases, you will as a scout be allocated an amount of money to invest in yourself - your own micro-fund so to speak. In this case you are able to invest the amount yourself while ensuring an investment allocation for your program's venture capital firm either at the time of your investment or in future rounds.

Related Answers

Both types of scouts have as their main goal to source new startup deals to invest in. lInternal VC scouts are usually part-time or full-time employed as an intern, researcher, associate, or junior partner. External scouts are not officially employed by the investor and are usually compensated on a deal-by-deal basis.

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Venture scouts are resourceful connectors that may assist venture capital firms in discovering hidden, exceptional startups and founders to invest in ahead of the competition.

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While both documents may contain similar elements, it's the angle from which each is written that makes the difference.

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Yes, you can. In fact, unless you're independently wealth, you should work while being a scout to sustain a living.

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Having investment experience is not a requirement to start a role as a VC scout. So for example you don't need to have a history of investing your or other people's money in startups.

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Broadly speaking, the answer is no. You do not have to be an accredited investor to be a startup scout.

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A startup scout is a person that helps venture capital firms discover new startups to invest in. A startup scout can also be known as a venture partner, venture scout, VC scout, etc.

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