VCs using scouts means founders get the short end of the stick

Europe's tech ecosystem may benefit from more diverse and early-stage investment sources, but the increasing reliance on VC scout programs raises concerns. Scouts, often ex-founders or operators with extensive networks, help VCs discover startups early on, utilizing firm funds without personal financial risk. While advantageous for VCs and scouts, these programs often disadvantage founders by offering limited cash and restricting the use of a VC's brand for recruitment and sales. Additionally, scouts' investments lack the commitment and direct support that independent angel investors or direct VC investments provide, potentially hindering a startup's growth and future fundraising prospects. Some argue for fostering independent operator angels and more flexible early-stage investments from larger firms, as seen in the U.S., to better support emerging European startups. Innovators like Sahil Lavingia are exploring new scout program models, promoting greater transparency and equity involvement, which could inspire similar approaches in Europe.