The hardest part of venture investing is passing on great entrepreneurs.
This becomes even harder when the entrepreneurs come from a network that you really care about. For Scout, these are entrepreneurs with roots in the military, intelligence community and National Labs. More specifically, graduates from any of the United States Service Academies (USMA, USNA, USAFA, USMMA, USCGA).
In order to address what we identified as a gap for graduates of the Service Academies, Scout Ventures set out to seed a fund called Academy Investor Network.
As a foundational step, we recruited two General Partners and Service Academy Graduates, Sherman Williams and Emily McMahan. Sherman is a graduate of the United States Naval Academy who served as a Naval Intelligence Officer. He then went on to transition as an Investment Banker before moving into venture capital. He is currently a Kauffman Fellow and based in NYC. Emily is a graduate of the United States Military Academy who served as a Military Police Officer with multiple deployments to Iraq. She then transitioned as a CFO and key leader in the Veteran entrepreneurship ecosystem running Bunker Labs in Washington, D.C.
Initially, Sherman and Emily established the AIN syndicate to start putting together SPV deals and began growing the membership of AIN to over 350 Service Academy graduates and growing.
Additionally, AIN is in the process of launching a dedicated venture fund to support the community with USAA as an anchor LP. Unlike Scout, AIN invests exclusively in dual-use technology and veteran-led startups and relies on the syndicate for investment and their Fortune-500 level network.
You really want to talk about "hard"? Try starting a VC fund as a first time entrepreneur and fund manager. It's no secret that the barrier to entry for raising a VC fund is high — you have to have some form of track record, an extremely strong network, and a library of esoteric knowledge about the fund management business.
Since the Scout team has a rich history of entrepreneurial venture experience, this barrier to entry has stayed top of mind for us. We've started funds from scratch and have learned a meaningful amount along the way. At some point in the journey, we thought about what it might look like to use our hard-earned knowledge to incubate another fund. In particular, we wanted to incubate a fund to address the aforementioned pain point of not being able to support nearly as many entrepreneurs as we'd like in our veteran and service academy network. In that vein, we could also lean further into our network’s competitive advantages.
Given that the core Scout team are all Service Academy grads, we're deeply tied into the veteran (Service Academies, especially) entrepreneurial ecosystem.
In many ways, we’ve found that the power of this network has been underutilized. We believe there's an objective argument to be made that the Service Academy network has the most inherent trust among institutional networks who have a strong track record of success. The extraordinary shared experience and alignment around service makes for a unique bond and willingness to help fellow graduates. When thoughtfully harnessed, this supportiveness can be powerful behind a venture fund-- both for sourcing and supporting the portfolio.
We are truly excited about the future of AIN and the great things to come from Sherman and Emily.