Sequoia this week announced a broad overhaul in a memo posted to X, a transfer that features closing its London workplace and shutting down its scout program. Observers warn that it will be a mistake to learn an excessive amount of into the London closure, because the British capital has a thriving AI scene. Alternatively, the choice to finish scouts says extra about the place enterprise investing is headed.
That’s partly as a result of 17 years in the past, Sequoia pioneered the scouts mannequin, wherein choose founders and operators write checks on the agency’s behalf. Amid elevated competitors for deal stream, many VC companies followed suit. However a consensus now appears to be rising that the mannequin has reached its limits in its present kind.
Not everybody was offered on the mannequin within the first place. “They pioneered the scout program however [to be honest] it by no means made sense to me!” VC Sheel Mohnot wrote on X this week. “The scouts themselves don’t actually care that a lot concerning the investments, you’ll be able to nonetheless miss (like they did with Uber), unsure what it will get you. I believe different companies will shutter theirs too.” he added.
To be clear, Sequoia didn’t make a case towards scouts within the memo. As a substitute, it framed its resolution as a part of a broader want for extra focus. However its objective of “placing extra power behind fewer folks and issues” is prone to resonate with others who’ve questioned the ‘spray and pray’ method to scouting.
Rival agency Andreessen Horowitz (a16z), as an example, rolled out a global scout network geared toward recognizing alternatives within the U.S. and in addition in smaller European hubs. However a16z companion Gabriel Vasquez advised TechCrunch earlier this yr that the agency had revamped its program to double down “on the perfect folks.”
Underneath this new method, Vasquez defined, scouts get extra sources however are additionally anticipated to be extra lively, akin to by co-hosting dinners with the agency. “They get extra price range, however we’ve diminished the quantity,” he stated.
This additionally appears to point that it’s VC companies which have been driving an overhaul of the mannequin. For founders, being a scout is engaging: it brings them nearer to companies they might need checks from sometime, or perhaps a companion position with, and being seen as somebody who can write a examine can increase their standing amongst different founders.
Some scouts will undoubtedly mourn the tip of Sequoia’s program. Amongst them is Station F boss Roxanne Varza, who wrote on LinkedIn that she was “unhappy” to listen to that this system was getting minimize off, and “hope[d] that different funds [w]on’t comply with swimsuit.”
Varza, a former Sequoia scout from 2020 to 2025, advised TechCrunch that she had no info past what has been shared publicly, however noticed that turning into a scout had typically been a stepping stone for aspiring funding managers.
“I can not identify all the unbelievable scouts which have gone on to affix or construct funds, however there are fairly a number of. And the scout packages could have helped them get there — allowed them to construct an funding observe file, allowed them to construct relationships with numerous funds instantly, and extra,” she wrote to TechCrunch.
In keeping with Varza, this system’s impression went past the person stage, as an alternative serving to your entire ecosystem grow to be extra mature. “I consider they’ve helped to foster the funding tradition and early-stage funding panorama that we now see in Europe, for instance,” Varza stated.
Whereas others could agree with Varza concerning the position these packages have performed, they might nonetheless have run their course for 2 causes. First, seasoned operators could get extra monetary upside as angels. When it’s their very own cash, they get to maintain the returns, too. Second, main VC companies are actually huge and well-known sufficient that the perfect founders have a tendency to return to them, in order that they fear much less about lacking offers, besides on the very earliest levels or in niches and geographies the place they’ve much less attain.
Nonetheless, the pull of these early and area of interest offers is why scouts packages are more likely to get revamped than to vanish solely. “Whereas Sequoia could also be reducing this system, enterprise partner-style offers are prone to proceed,” stated Varza in her electronic mail to TechCrunch. “Scouts was only a approach to scale the format. I don’t think about Sequoia would finish all types of enterprise companions, however they’re stuffed with surprises.”
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