A venture scout is a hybrid between an independent contractor and angel investor who partners with a VC firm, typically splitting returns on deals they source. Scouts have higher risk tolerance and write smaller checks than institutional funds, and help founders see beyond their own narrow focus.
And so could you maybe give us like an overview of like what a scout is and kind of how that fits within the, you know, the world of venture?
Yeah, a scout is something of a mix between an independent contractor and an angel investor. Basically, you partner with a firm. The traditional way it works is you partner with a firm, they set aside some money for you to invest on behalf of the firm, maybe with some approval process, and then you split the return on the investment, whether that's 70/30, 50/50, 90/10. There's a bunch of And the idea is the incentives are aligned for you to make great investments. If you're a founder or even a student or something else, it gives you the money to invest in those companies and you're bringing in great deal flow for the VC firm that you're partnered with. There's also more casual scouting relationships where maybe you just have a great relationship with a partner at a VC firm and you send them deal flow. And they may, you know, give you some sort of bonus or something like that. Or it may just be that that helps you build up a relationship in case you wanted to become an investor down the line. Or there's like the idea of a venture partner, which is sometimes like, you know, an advisor to a VC firm. You may bring in some deals, but also you have a specific set of expertise where you can jump in and advise their portfolio companies or help the actual investors think about a space that they might not be able to know as well because they can't go as deep. But I think scouting is a really great opportunity. It's a great way to hone your perspective as a founder by taking your, your perspective broad, because founders are generally very deep. They're very focused on what they're building in the area that they're building in. And I think it is helpful to take a second to Lift your head up, look around, see what kind of investments are happening in the world.
Yeah, certainly. So as far as like when it comes to like how scouts, you know, evaluate like an investment and, you know, how that might differ, I would say, from like venture and an early-stage fund, you know, you have some really good experience with that. So could you maybe share a little bit more about how you evaluate investments from a scout kind of point of view versus venture? Sure.
I've thought about this a lot. When I first started on venture, I was at NEA, and so I was thinking a lot about What are the kind of deals that NEA likes? What are the kind of deals that will help me, you know, help the firm? What are the kind of deals that the market is looking at? Let me make sure I don't miss anything. And when you're an angel investor or a scout, I think the question you really ask yourself is, what are the deals that, you know, I personally want to be associated with? What are the companies I really want to exist in the world, whether that's because I really believe in the founder or because I think this company or space or product needs to exist. It's a bit more of a personal motivation. And I also think the risk tolerance is a bit higher, in part because they're also smaller checks, but also because it's on you if it doesn't work out. Versus when you're investing for a firm, like a firm like Lightspeed, I'm there to provide financial returns for our limited partners. And I'm also there to help my firm become the best venture firm, hopefully, in the world. And so, when I think about the companies I'm investing in, it's not just my perspective I'm taking into account. It's a broader perspective about what I think is the highest impact company I could possibly put my money and my time behind.
