Scout for funds

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 exits (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.

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

How come? Well, it's simple. The concept of an accredited investor comes from the SEC and its goal is to protect unsophisticated investors from losing money in high-risk investments. But as a scout, you are not investing your money and usually no money at all.

Instead, scouts usually refer startups as potential investments to investors. Those investors are sophisticated to be able to assess the investment opportunity and decide for themselves the associated risks and rewards before going ahead with their investment.

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. It is also not necessary to have invested in other types of asset classes like public company stocks, cryptocurrencies, property, etc. In fact there is no requirement on personal wealth.

On the other hand, one key criteria that is much more important to have than investment experience is to have a good feeling for what makes for a good startup as well as a network of quality startups, usually at an early stage, to refer to investors.

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

Why is that? Because scout roles will rarely pay you a regular income. Moreover, due to the nature of startups, the rewards for being a scout may take years to materialise given that a startup may take 5-10 years to exit.