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Introducing Calm Company Scouts

Written By:
Tyler Tringas
November 12, 2021

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Our long-awaited scout program is live!

Scout programs Historically, breaking into early stage investing has been incredibly difficult. The best way to become an investor has always been to have an investing track record. The problem is that track records are a "chicken and egg" problem if you don't already have enough personal wealth to go make 25-50 personal investments. Enter scout programs, which offer a way for non-investors to refer good investment opportunities, build a track record, and get some upside in great startups before they have their own capital to invest.

At least that's how they're supposed to work in theory. The reality is that many programs are exclusionary in who they allow to be a scout, encourage a "spray and pray" mentality of scouting every company to every fund, and most importantly don't offer a real on-ramp to becoming an investor.

So we decided to do things differently, with a focus on making our scout program an explicit on-ramp to becoming an investor at Calm Company Fund.

Our scout program is an explicit on-ramp to becoming an investor at Calm Company Fund

Our Scout Program

While in many ways our program looks like a traditional scout program, the overarching goal is for it to truly be an open meritocratic on-ramp for new investors/GPs in calm companies. Thanks so much to all who gave feedback on the original post for the idea.

How it works

1/ Join the Scout Program. This will be open to all, although there will be a manual approval process to keep out spammers.

2/ To scout a company just have them fill out an application on our site and give them your Scout ID code to add to their application. The application is open to all and scouts don't need to make a "warm intro."

3/ Optionally, scouts can submit an investment memo for the company making the case for why you think this company is a good fit for our thesis. We have a specific templated form that maps to our Key Investment Questions for you to fill out. We (you and I) will discuss the memo and I'll be providing feedback on the memo as well as the company.

4/ If we invest in the company, scouts get to choose either (a) cash compensation or (b) a share of the carry in our investment.

There are two tiers of compensation contingent on whether the scout submits a viable investment memo.


Cash

No Memo: $2,000

With Memo: $5,000

Carry Share

No Memo: not available

With Memo: 10% of our carry on the deal

Note: we plan to ramp up these compensation levels per deal for scouts who successfully scout multiple investments.

What's a carry share

Our funds are structured, like most venture funds, with 20% carried interest (aka "carry”). We raise a fund, invest it all in a portfolio of companies, and then start getting money back in the form of either exits or Shared Earnings from those portfolio companies. Once investors have gotten all of their initial capital back, then carried interest kicks in an we keep 20% of whatever else comes back to the fund. That's carry at the fund level.

Our scout carry sharing model is done at the individual deal level. So if a scout sends us a deal with an investment memo, we invest, and they elect to take carry share, they will get a percentage of the profits from that one investment. Let's say we end up investing $250k into the company, the scout would get 10% of our carry on the $250k investment. If some day the investment exits for 7x the valuation we invested, then our $250k investment turns into $1.75m back to the fund or $1.5m in profit. Our carry on that would be 20% or $300k and the scout would get 10% of that which would be $30k or 6x more than the cash compensation.

Scout Carry Share = ([Total cash returned from investment] - [investment]) * 20% fund carry * 10% scout carry

Reminder: As scouts perform well over time, we will increase the carry share percentage on subsequent scouted deals.

A true on-ramp to General Partner

This is probably the only scout program in all of early stage investing where the primary goal is to source and vet new investors (GPs) at Calm Company Fund. We don't necessarily need more "dealflow" at the moment and this isn't an affiliate program. The basic premise behind our scout program is to create a structured way for me to actually do the work investing with an open group of people interested in investing in calm companies.

The dream outcome here is that once someone has scouted several deals, and the most recent investment memos were spot on and effectively rubber stamped by me, we'll empower those folks with a chunk of capital to start investing.

Growing the investment team at Calm Company Fund is my top priority and this is the most meritocratic, repeatable, and scalable way to do that I can think of. Let's get to work (together).

Essential Reading for Scouts

The main reason we write so much about our thesis is to turn it into an open source toolkit for others to apply the principles of our thesis to areas outside of our current competency. I'm really hoping scouts will take the basic ideas of our thesis and run with it, applying it persuasively to niches, geographies, founder profiles, and business models that aren't on our radar.


Join the Scout Program Here →


Disclaimers & FAQs

Participation in our scout program is completely at our discretion. Nobody is eligible to scout deals for us until they submit a scout application and are approved. Our intention is to make this open to all and only filter out spammers, but we retain full discretion here.

Scouts do not represent Calm Company Fund or any of its affiliates and are not empowered to make investment decisions on behalf of the firm.

Investment Memos are also subject to approval by the fund. We want to see some real effort and thought put into these before authorizing them for the higher compensation tier. Scouts are still eligible for the lower tier of compensation if the investment memo is rejected. Memos will be accepted or rejected before we make a final investment decision on the opportunity.

Your Scout ID is the final arbiter of "who scouted this deal." If multiple scouts are claiming to have referred an investment opportunity, we'll defer to whichever Scout ID the founder put in their Application.

Scout Carry Share is contingent on there being fund-level carry to share. It's possible for an investment to be an early exit for the fund, not yet return all of our investors' capital, and therefore not generate any carry for the fund to be shared with the scout. Scout Carry Share will be paid as soon as the fund has carry to share.


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