Sequoia shutting down its Scouts program marks the end of an era

Sequoia has announced the shutdown of its Scout program, marking the end of an era in venture capital. The decision, revealed in a memo shared on X, also includes the closure of its London office. While some observers may not see the London closure as significant, given the thriving AI scene in the British capital, the decision to end the Scout program reflects a broader shift in venture investing.

Sequoia's move comes as increased competition for deal flow has led many VC firms to adopt the Scout model, in which selected founders and operators write checks on the firm's behalf. However, a consensus now suggests that the model has reached its limits in its current form. Critics argue that the Scout program's effectiveness is questionable, as the invested founders often don't show much interest in the investments.

Notable figures, such as VC Sheel Mohnot, have expressed skepticism about the model, stating that it never made sense to them. Sequoia's decision to "put more energy behind fewer people and things" is likely to resonate with those who have questioned the 'spray and pray' approach to scouting. Competitors like Andreessen Horowitz have also revamped their Scout programs, focusing on the best people and expecting them to be more active.

For founders, being a Scout can be attractive as it provides a pathway to potential future partnerships or check-writing roles. However, seasoned operators may find more financial upside as angels, while leading VC firms have become so well-known that the best founders often gravitate towards them, reducing the need for Scout programs.

Despite these factors, Scouts programs are more likely to be revamped rather than completely discontinued, as the allure of early and niche deals remains strong.