3 Steps To Start Scouting Startups
Step 1 - Call Yourself A Startup Scout
Over the past two years, I accidentally became the world’s best startup scout. And I don’t say that lightly. No, I wasn’t a Sequoia Scout and I didn’t land LSVP a hot deal, but I firmly believe that I am still the best. How is this possible? Well, I started a podcast where I interviewed early-stage founders before they got big; pretty much the opposite of How I Built This. After nearly 650 episodes, the progress that my guests have made since recording is staggering.
Some of My Scouting Stats
Of those 650 conversations:
79 companies raised more venture capital, going from a $3.7M avg raised at the time of recording to $20M avg funding today
37 of those companies were interviewed before any fundraising was announced, meaning I got to them before any institutional investor
Founders I’ve interviewed have raised from a16z, LAUNCH, Sequoia, LSVP, Chapter One, and pretty much everyone else.
Here are the numbers in the flesh:
At some point between episodes 300 and 400, I realized I was really good at scouting startups. For me, that meant identifying the good ones and being able to get access to the founder’s time. I did this consistently and repeatedly through the podcast. After a while, I thought I could take this data and join a VC firm so I took the first half of 2020 and tried to break into VC. When I realized this was impossible for a non-networked person like myself, I thought I could at least become a scout.
After applying for a handful of programs, all of them rejected me. I had no idea what was happening. I mean, look at the numbers up there! Look at those names. Those logos. It was at this point where I realized the system was lacking infrastructure, so just I started calling myself a scout. Soon after this, I started a company called Seedscout. The goal is to be able to turn people like me into startup scouts while skipping the bureaucracy of Sand Hill Road and its cousins. If the system needs infrastructure, we’re building it. And it starts with a mindset shift.
Don’t Wait For Someone to Call You a Startup Scout
There are millions of startups out there that are waiting to be helped… ones that have put in the time and work, but just don’t have the network to get a quick check or a warm intro to a good VC. Chances are if you’re reading this post, you know of one or two of these founders. Befriend them, provide value, and earn their trust. Once you have done this, you’re already doing the job of a scout, so may as well call yourself one. God knows no one else is going to do it for you.
The current scout programs are exclusive and largely elitist, and chances are you aren’t impressive enough on paper to be deemed a scout by them. I know I wasn’t. So F the system. Want to be a scout? Call yourself one.
Find Your Corner of Ther Internet
Startup scouting pretty much means meeting cool founders all the time. It means being the place where founders want to go when they are raising. It means organically befriending founders without the motive of scouting, so when that is relevant, you’re the first that comes to mind. One of the best ways to do this is to find the right communities/networks on the internet and embed yourself into them. For me, this is Twitter and my podcast. I have a deep founder community on Twitter and meet new people every day, who I then invite onto my podcast.
In your case, where can you start building relationships with founders on the internet? Maybe you like Twitter, or perhaps you’re more of a Discord or Reddit person. Maybe you do live in a thriving tech community and you just work at the popular coworking space where all the founders hang out. The key here is that you need to start developing a relationship with founders that communicates to them that 1. You have good intentions/cool vibes. 2. You can help them when the time comes. In that order…
If you try to scout companies for a specific transactional outcome, founders will sniff this out from a mile away. You need to truly want to make founder friends and just chill with them for a while in order to gain their trust. Besides, founders are awesome anyway.
Talk To Founders All The Time
One of the best ways to know when you’ve met a great founder is to know what a good founder looks/acts like. The same goes for bad founders. The only way you can develop this muscle is to have A LOT of founder conversations and develop your own conviction on what makes a good and bad founder. Then, it’s key that you track the founders who succeed vs. those who don’t and start to develop your pattern recognition framework. You’ll start to notice the traits in founders that signal they are far too early, or much worse, have bad morals. This can’t be studied in a book or online. This can only be accomplished in the field, talking to hundreds of founders a year.
You’ll need to exercise judgment whether a founder you meet is worthy of an investor intro or not. The answer is rarely yes or no. It’s usually yes or not yet. It’s key that you understand what type of conviction you need in order to make intros for a founder as well as having the discipline when you don’t think a founder is there yet. The only way to properly judge these situations is to get reps. So get out there.
What about getting paid?
Now, up to this point, you could only get compensated for scouting if someone was willing to pay you for your time/performance to find a good deal. I am excited to share that Seedscout is going to enable anyone to become a startup scout and get paid for it. We’re still building, but if you want to stay updated, check out our site and join our waitlist. We can’t want to show you what we’re building.
Hopefully reading this post gives you some idea of where to start in regards to scouting and a rough roadmap on how to spend your time. If you have any questions, you can always feel free to email me and we can discuss: Mat@seedscout.co. Happy scouting!