Sequoia this week announced a broad overhaul that includes closing its London office and ending its scout program, a model it pioneered 17 years ago in which select founders and operators write checks on the firm's behalf. A consensus seems to be emerging that the widely copied model has reached its limits in its current form.
Sequoia pioneered the scout program 17 years ago. Amid increased competition for deal flow, many VC firms followed suit.
"They pioneered the scout program but [to be honest] it never made sense to me!" wrote venture capitalist Sheel Mohnot on X. He said scouts do not care that much about the investments and suspected other firms would shutter their programs too.
Sequoia did not make a case against scouts in its memo, instead framing the decision as part of a broader need for more focus, or “putting more energy behind fewer people and things.” The goal is likely to resonate with those who have questioned the “spray and pray” approach to scouting.
Roxanne Varza, Station F’s boss and a former Sequoia scout, wrote on LinkedIn that she was “sad” to hear the program was being cut off. She told TechCrunch that becoming a scout had often been a stepping stone for aspiring investment managers and that the program may have helped them build a track record and relationships with funds. She said she believed the program helped “foster the investment culture and early-stage investment landscape that we now see in Europe.”
Varza hopes other funds will not follow Sequoia’s lead. Andreessen Horowitz (a16z), which rolled out a global scout network, has revamped its program. Partner Gabriel Vasquez told TechCrunch the firm had revamped it to double down “on the best people,” giving fewer scouts more resources and expecting more active involvement, such as co-hosting dinners.
The model may have run its course for two reasons. First, seasoned operators may get more financial upside as angels, keeping the returns when investing their own money. Second, leading firms are now big and well-known enough that the best founders tend to come to them, so they worry less about missing deals, except at the very earliest stages or in niches and geographies where they have less reach. Still, the pull of early and niche deals means scout programs are more likely to be revamped than disappear entirely. “While Sequoia may be cutting the program, venture partner-style deals are likely to continue,” Varza wrote.
Analysis
Why This Matters
- Impacts deal flow: Sequoia's decision could trigger a cascade across the industry, altering how top VC firms access early-stage founders, especially in regions like Europe.
- Affects career pathways: The role of founder-scout has been a key stepping stone for angels and aspiring VC partners; its removal changes the ecosystem's social and professional incentives.
- Signals market maturity: The shift from volume-based scouting to high-conviction relationships reflects a broader maturation of the venture capital industry.
Background
Sequoia Capital is one of the world's most prestigious venture capital firms, known for backing companies like Google and Apple. Seventeen years ago, it pioneered a "scout" model where founders and operators outside the firm made investments on its behalf. The model was widely adopted by VC firms competing for deal flow. The decision to shutter the program, announced in a memo this week, is seen by many in the industry as marking the end of an era.
Key Perspectives
Sheel Mohnot (venture capitalist): Expressed scepticism about the model, arguing scouts lack deep commitment and predicting other firms will follow Sequoia in ending their programs.
Roxanne Varza (Station F director / former Sequoia scout): Expressed sadness at the closure, calling the program a vital stepping stone for venture talent and crediting it with fostering Europe's investment culture. She expects venture partner-style deals to continue.
Gabriel Vasquez (Andreessen Horowitz partner): Indicated that a16z has already moved to a more focused model, giving more resources to a smaller, more active group of scouts.
What to Watch
- Whether other major VC firms follow Sequoia in shuttering their programs or revamp them like a16z.
- How the European startup ecosystem adapts to losing a well-known gateway to Sequoia's capital and brand.
- The next iteration of the venture partner model that emerges to bridge firms and early-stage founders.
Checked
12 claims in this story checked against 1 source: 11 supported.
Show each claim
- Partly supportedSequoia’s closure casts doubt on the venture-capital model broadly.TechCrunch: “the decision to end scouts says more about where venture investing is headed.”
- SupportedSequoia announced an overhaul that includes closing its London office and ending its scout program.TechCrunch: “Sequoia this week announced a broad overhaul in a memo posted to X, a move that includes closing its London office and shutting down its scout program.”
- SupportedSequoia pioneered the scout model 17 years ago, in which selected founders and operators write checks on the firm’s behalf.TechCrunch: “17 years ago, Sequoia pioneered the scouts model, in which select founders and operators write checks on the firm’s behalf.”
- SupportedA consensus seems to be emerging that the scout model has reached its limits in its current form.TechCrunch: “But a consensus now seems to be emerging that the model has reached its limits in its current form.”
- SupportedMohnot wrote, “They pioneered the scout program but [to be honest] it never made sense to me!”TechCrunch: ““They pioneered the scout program but [to be honest] it never made sense to me!” VC Sheel Mohnot wrote on X this week.”
- SupportedMohnot said scouts do not care much about the investments and suspected other firms would shut their programs too.TechCrunch: ““The scouts themselves don’t really care that much about the investments, you can still miss (like they did with Uber), not sure what it gets you. I suspect other firms will shutter theirs too.””
- SupportedSequoia’s memo did not make a case against scouts and framed the decision as a need for more focus.TechCrunch: “To be clear, Sequoia didn’t make a case against scouts in the memo. Instead, it framed its decision as part of a broader need for more focus.”
- SupportedVarza said the program may have helped aspiring investment managers build a track record and relationships with funds.TechCrunch: “the scout programs may have helped them get there — allowed them to build an investment track record, allowed them to build relationships with various funds directly, and more”
- SupportedVarza said the program helped foster Europe’s investment culture and early-stage investment landscape.TechCrunch: ““I believe they have helped to foster the investment culture and early-stage investment landscape that we now see in Europe, for example,” Varza said.”
- Supporteda16z revamped its program to focus on its best people, with fewer scouts getting more resources and being expected to participate more actively.TechCrunch: “the firm had revamped its program to double down “on the best people.” Under this new approach, Vasquez explained, scouts get more resources but are also expected to be more active, such as by co-hosting dinners with the firm.”
- SupportedThe scout model may have run its course because operators can earn more as angels and leading firms have less need to scout for deals.TechCrunch: “First, seasoned operators may get more financial upside as angels. When it’s their own money, they get to keep the returns, too. Second, leading VC firms are now big and well-known enough that the best founders tend to come to them”
- SupportedVarza wrote, “While Sequoia may be cutting the program, venture partner-style deals are likely to continue.”TechCrunch: ““While Sequoia may be cutting the program, venture partner-style deals are likely to continue,” said Varza in her email to TechCrunch.”
