Embarking on a journey to become a scout for a VC firm? It's a path less traveled, yet filled with opportunities. Let's delve into the nuances of this unique career, exploring the skills required, the challenges faced, and the rewards reaped.
Become a scout
Help your founders in transition
- Monetize your deal flow
- Scouts are intended to be a lighter-touch relationship focused on sourcing
- Benchmark compensation and structure against peers
- Promote diversity in VC
- Scout-fund fit matters most
How much can you earn?
Scouts are typically paid a percentage of carry-on investments they source.
- Excluding any upfront cash, your cash compensation, which is normally paid out when that startup exits (typically three to 12 years from the present) equals:
- companies you source * (% of companies the VC invests in) * (average VC check size)
- (average multiple generated, minus 1) – (your percentage of the carry pool, typically 2.5%-10% of the fund’s carry pool on a given investment, i.e., of the typical 20% that the fund earns)
Other Investors that Pay Sourcing Fees
Private equity funds pay sourcing fees
- The median salary for a new business development associate with a private equity firm is around $100,000
- Most scouts get paid on a success basis, without retainer
- You can make an argument for a retainer if you: spend significant time marketing, sourcing and filtering investments, beyond your normal business activities
- Are prominent enough that your affiliation with the firm generates brand value
