Sequoia ends its scouts program and closes London office
The venture firm says it wants sharper focus, while other investors question whether the scout model still works.
Key points
- Sequoia outlined sweeping changes in a note shared on X
- The firm is closing its London office and winding down its scouts program
- Sequoia pioneered the scouts model about 17 years ago
- Some investors believe the scout structure has run out of room to grow
- Analysts expect scout programs to be revamped rather than fully disappear
Venture capital firm Sequoia has set out a wide-ranging restructuring, according to TechCrunch. The details were released in a note published on X. The plan includes shutting its London office and winding down its scouts program.
TechCrunch notes that reading too much into the London decision would be a misjudgement, because the city has a busy artificial intelligence sector. The end of the scouts initiative, by contrast, offers a clearer signal about the direction of venture investing.
What the scouts model involved
Sequoia introduced the scouts approach roughly 17 years ago. Under the arrangement, chosen founders and operators were able to make investments using the firm’s money. As rival firms competed harder for promising startups, many others adopted similar schemes.
Opinion is now shifting toward the view that this structure has run out of room to grow in its present form. Not everyone backed it from the outset. Venture investor Sheel Mohnot wrote on X that the scouts themselves seemed indifferent to the outcomes of their picks. He also predicted that other firms would soon close their own programs.
Sequoia’s explanation
In its memo, Sequoia did not present a case against scouts. It described the changes as part of a need to concentrate its efforts. The firm said it intends to direct greater effort toward a smaller group of people and initiatives.
That approach may appeal to those who think scout networks have grown too large and unfocused. Andreessen Horowitz, usually called a16z, has moved in another direction. It set up a worldwide scout network to look for deals in the US and in smaller European centres. Gabriel Vasquez, a partner at the firm, said earlier this year that a16z had reworked the program to concentrate on its strongest candidates. Scouts now have larger budgets, but the firm has cut the number of them, and they are expected to take a more hands-on role, including hosting dinners alongside the firm.
TechCrunch observes that the changes appear to be driven by the venture firms themselves. For founders, serving as a scout has real appeal. It offers closer contact with firms they might later seek funding from or work for, and being known as someone able to write cheques can boost their reputation among peers.
Reaction and outlook
Some in the sector regret the decision. Roxanne Varza, who runs Station F, said on LinkedIn she felt sorry to learn the program was ending and expressed hope that other funds would not do the same. Varza was a Sequoia scout from 2020 to 2025. She told TechCrunch she knew nothing beyond what Sequoia had made public.
Varza said scouting had frequently been a launchpad for people hoping to become investment managers. Scouts could build a record of investing, form direct ties with funds, and gain other advantages. She also argued that the programs helped mature the wider ecosystem, including the early-stage investment culture now visible in Europe.
Others accept her points but believe the model may have served its purpose for two reasons. Experienced operators stand to earn more as angel investors, since they keep the returns on their own money. In addition, large and well-known firms now draw the strongest founders without needing scouts, except at the earliest stages or in niche markets and regions where their reach is thinner.
Varza added that venture partner arrangements are likely to continue in some form. She said scouting was simply one way of expanding that format, and she did not expect Sequoia to abandon every version of such partnerships.
Frequently asked questions
Why is Sequoia shutting down its scouts program?
Sequoia did not criticise the scouts model in its memo. The firm linked the changes to a wider push for sharper focus, directing effort toward fewer people and projects.
Is Sequoia closing its London office too?
Yes, the memo that announced the overhaul included closing the London office. TechCrunch reported that observers warned against reading too much into this, as London has a thriving AI scene.
What was the scouts model?
Scouts were chosen founders and operators who could make investments for a firm. Sequoia pioneered the model about 17 years ago, and many other venture firms later adopted it.
Sources
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