Pay the scout carry on the exit gains of the deals they actually source and work — never on capital introduced. Scout-style carry is a back-end profit interest paid to a specialist sourcer on the realized exit gains of the specific deals they originate and help evaluate; because it keys to realized deal outcomes for genuine GP work, it is the strongest possible pull on deal-engine quality supply and fill (SPV alignment 5, SPV conversion 5). It is paid for origination and investment labor — sourcing plus at least one of evaluation, negotiation, or post-close support — and pointedly not for capital introduction, which is the line that keeps it out of the Ranieri §15(a) unregistered-broker perimeter. The headline verdict: it ranks #13 of 14 with a weighted total of −8.0 (tied with bona-fide co-GP carry) — a deep-negative, deal-side instrument that the RIA-weighted model penalizes hard because it earns nothing on the advisory side (RIA alignment 1, RIA conversion 1) while carrying top-of-scale complexity (5) and a conditional broker-collapse risk (hard-legal 3). It sits on the same doctrinal footing as co-GP carry: available for genuine GP work, but only where the recipient does real sourcing and diligence — not "capital introduction in a costume."
This page walks all nine axes, states the weighted total and rank, shows the DRIL evidence badges for the three legal axes with their verification gap-notes, flags the proxy dependency and the down-corrected brand-risk score as audit items, and lists the archived primary law each score is graded against. Every characterization here is counsel-gated. Re-weight the axes live in the interactive model.
Detailed summary — the nine axes
Each axis name below is a dotted-underline term: hover or focus for the short definition, or follow the link to Methodology. Axes are grouped Alignment / Risk / Conversion. Alignment and conversion score higher = better; the four risk axes score higher = worse.
Alignment
| Axis | Score | Rationale |
|---|---|---|
| SPV alignmentSPV alignment (higher=better) — does it advance the deal engine / sourcing? 1 = decoupled from deals by design; 5 = paid on realized deal outcomes. | 5 | Back-end carry on the specific deals the scout originates and helps evaluate ties pay directly to realized deal outcomes, the strongest possible pull on deal-engine quality supply and fill (rubric anchor: origination/co-GP/scout carry = 5). |
| RIA alignmentRIA alignment (higher=better) — does it advance wealth AUM / advisory conversion? 1 = aimed at capital not advisory relationships; 5 = paid on advisory clients delivered. | 1 | Deal-side carry is aimed at capital and deals, not bona-fide advisory relationships or recurring AUM, so it does nothing for the crown-jewel RIA book (rubric anchor: deal-side carry ~1). |
| Combined-entity fitCombined-entity fit (higher=better) — does it advance the HoldCo flywheel as one? 1 = needs a BD/CAB build or a second adviser; 5 = runs cleanly inside one adviser + MediaCo. | 3 | Runs inside the bona-fide co-GP wrapper (Architecture model 6) without forcing a BD build or a second adviser, so it fits the combined-but-carve-ready structure — but the external-party GP apparatus and per-deal carve add friction versus the clean HoldCo/media/advisory spine. |
Risk higher = worse
| Axis | Score | Rationale |
|---|---|---|
| Complexity riskComplexity risk (higher=WORSE) — operational machinery to run. 1 = one-time grant/disclosure only; 5 = build-and-supervise a BD/CAB or a multi-doc external GP stack. | 5 | Highest-tier machinery: the five-doc external-party GP stack, a per-deal carry carve before the house split, plus 206(3)/206(1)–(2) mechanics whenever RIA clients are routed into a scout-led sleeve (rubric anchor: co-GP/scout carry = 5). |
| Brand risk to the creatorBrand risk (higher=WORSE) — personal-brand/securities exposure. 1 = minimal; 5 = creator becomes an unregistered broker with bad-actor taint + personal liability. | 3 | The scout becomes a covered GP/promoter subject to 506(d) screening and disclosure obligations, so a genuine-GP-work slip or a re-characterization as capital-intro lands on the individual's own reputation and liability (rubric anchor: any carry ~3–4). Down-corrected from 4 — see calibration note. |
| Hard legal riskHard legal risk (higher=WORSE) — is it a Ranieri/Van Eck/15(a) transaction-based-comp pattern? 1 = no transaction nexus; 5 = the Exchange Act 15(a)/Ranieri violation itself. | 3 | Same doctrinal footing as co-GP carry: safe as carry-on-exit ONLY if the scout does genuine investment work (sourcing plus evaluation/negotiation/post-close); if it is in substance paid for capital introduction it collapses to unregistered-broker activity under the Ranieri 15(a)/3(a)(4) line (rubric anchor: scout/co-GP carry ~3). |
| Ongoing compliance burdenCompliance burden (higher=WORSE) — recurring upkeep. 1 = grant-then-passive; 5 = continuous point-of-endorsement disclosure + 506(d) re-screening + adviser/FINRA supervision. | 4 | Recurring per-deal upkeep: 506(d) bad-actor bring-downs each deal, plus transaction-by-transaction 206(3) consent and documented 206(1)–(2) suitability every time an RIA client is allocated into a scout-led deal (rubric anchor: co-GP/scout carry ~4). |
Conversion
| Axis | Score | Rationale |
|---|---|---|
| Expected RIA conversionRIA conversion (higher=better) — how much it drives creators to deliver advisory clients. 1 = pulls toward capital/deals; 5 = directly incentivizes delivering advisory clients. | 1 | Pulls the person toward sourcing deals and capital, not toward delivering managed-account advisory clients, so it does not itself grow the RIA book (rubric anchor: deal-side carry ~1). |
| Expected SPV conversionSPV conversion (higher=better) — how much it drives deal participation. 1 = decoupled from deals by design; 5 = built to move deal capital / fill allocations. | 5 | This is a mechanism built to move deal capital and fill SPV allocations by rewarding origination on realized deal outcomes (rubric anchor: origination/co-GP/scout carry = 5). |
Assessment
The weighted total of −8.0 places this mechanism 13th of 14 — tied with bona-fide co-GP carry and above only the outright anti-pattern. The deep-negative score is a direct consequence of the RIA-weighted methodology: the mechanism's two 5s live on the SPV/deal side (alignment and conversion) where the weights are modest (1.0 and 1.0), while its zeros-for-the-RIA (alignment 1, conversion 1 at the heavy 2.0 weight) earn almost nothing, and the four risk axes — complexity 5, brand 3, hard-legal 3 (at the punishing 3.0 weight), compliance 4 — subtract heavily. In plain terms: it is a genuinely useful deal-engine lever that the model deliberately ranks low because the model is a bet on the RIA funnel, not the deal book. Reach for it only for genuine GP work, and read the score as "correctly deprioritized," not "unsafe."
DRIL evidence — the three legal axes
The legal axes (brand, hard-legal, compliance) were graded from the mechanism's memo rationale and then adversarially refuted against the archived primary rule text and enforcement orders. Each badge below states whether the score is answered by verbatim on-point law, inferred by reasoned extension, or leans on a proxy. See the DRIL legend.
Ranieri's actual holding is that CAPITAL-keyed comp to an unregistered solicitor violates §15(a). The score-3 (conditionally safe) rests on the opposite side of that line — that DEAL-OUTCOME carry for genuine GP work is distinguishable from Ranieri's %-of-capital fact pattern. That is a reasoned distinction, not a verbatim holding; Ranieri nowhere holds deal-outcome GP carry is safe. The mechanism also states it sits on the "same doctrinal footing as co-GP carry," whose safety leans on the AngelList/FundersClub no-action letters — staff guidance that is not primary law and is not archived. No archived primary source affirmatively blesses scout carry.
Directly governed by on-point verbatim primary text. Rule 506(d)(1) makes the compensated "paid solicitor of purchasers" a covered person whose bad-actor record voids the exemption, and (d)(2)(iv)+Instruction impose the recurring per-deal "factual inquiry"; Rule 205-3(b) literally requires that "each equity owner" charged a capital-gains fee independently qualify — the per-LP carry look-through. The two primary drivers of the score are verbatim, on-point, and archived. (The 206(3) transaction-by-transaction consent sub-element is not separately archived and is inferred, but it is not load-bearing to the recurring-burden characterization.)
The archived §77q(b) text defines what 17(b) COVERS (a paid public describer of a security); the score-3 rests on the argument that a private deal-sourcing scout who publishes NO paid promotional content falls OUTSIDE that trigger — a fact-pattern distinction from the statute, not verbatim support that scout carry is a 3. The corroborating authority the rationale leans on for the "public promoter" distinction, Van Eck, IS archived in this build — but the "any carry ~3 band" residual is a scoring heuristic, not law. The axis mixes a verbatim-but-off-point statute (17(b) tells us what IS touting, not that a non-touting scout is a 3) with a distinction from an enforcement order.
legalScoresSound flag is false and its overall evidence is inferred: no archived primary source affirmatively blesses scout carry — the "distinguishable from Ranieri" conclusion is a sound reasoned extension, not a holding. Log as a verification task: archive the AngelList/FundersClub letters (and flag their non-precedential limits), or drop reliance on them and hold the safety on the no-transaction-comp ground alone.
legalScoresSound: false). Hard legal risk held at 3: the mechanism keys carry to realized DEAL outcomes for genuine GP investment work, not to capital raised — the dividing line from Ranieri, where Stephens was paid "1% of all capital commitments … for actively solicit[ing] investors." Carry-on-exit to a bona-fide co-GP is not "effecting transactions in securities for the account of others." Not a 5 (capital-keyed comp is the 5); deliberately deal-outcome-keyed — but the LIVE collapse risk keeps it at 3, because "in substance paid for capital introduction" becomes Ranieri unregistered-broker activity. Compliance burden held at 4: per-deal 506(d) screening + 206(3) consent + 205-3 qualified-client look-through on every LP charged carry — recurring but not the continuous every-post finfluencer-disclosure regime that would make it a 5. Brand risk lowered 4 → 3: the rationale leaned on 17(b)/Van Eck "disclosure-on-every-post," but §77q(b) reaches one who "describes such security for a consideration … from an issuer, underwriter, or dealer," and Van Eck turned on undisclosed AUM-linked comp to a public promoter — a private scout who takes back-end carry and publishes no paid promotional content does not incur that public-disclosure firehose. What remains is the individualized 506(d)/recharacterization exposure to the scout's own name — the "any carry ~3" band.
Primary legal sources
The archived primary law the three legal axes are graded against. Where the hosted file exists it is linked; unarchived cites are flagged.
- 15 U.S.C. § 78c(a)(4)(A) (Exchange Act § 3(a)(4)) — broker = "engaged in the business of effecting transactions in securities for the account of others"; the test carry-for-GP-labor is measured against (and passes, absent a capital nexus). usc-15-78c-a4-broker-definition.md
- 15 U.S.C. § 78o(a)(1) (Exchange Act § 15(a)) — broker/dealer registration prohibition; the bar the scout falls into if the carry is in substance paid for capital introduction. usc-15-78o-a-broker-registration.md
- In re Ranieri Partners LLC & Donald W. Phillips, Exch. Act Rel. No. 69091 (Mar. 8, 2013), Summary / §III ¶6 — 1%-of-capital-commitments comp to an unregistered solicitor who "actively solicited investors" = § 15(a) violation. The capital-keyed fact pattern the deal-outcome scout carry is distinguished FROM. sec-ranieri-partners-2013.pdf
- 17 CFR § 240.3a4-1(a)(2), (a)(4)(ii)(C), (c)(1) (issuer associated-person safe harbor) — a red herring here: the (a)(2) transaction-comp bar and (c)(1) limit to an issuer's own partner/officer/director/employee mean a third-party scout cannot invoke it; the mechanism is clean (or not) on the no-transaction-comp ground, not via this safe harbor. cfr-17-240-3a4-1-issuer-safe-harbor.md
- 17 CFR § 230.506(d)(1); Instruction to (d)(2)(iv) (Reg D bad-actor screen) — the compensated GP/"paid solicitor of purchasers" is a covered person; the issuer must run a per-deal "factual inquiry" to keep its reasonable-care defense. The load-bearing recurring-burden cite. cfr-17-230-506-reg-d.md
- 17 CFR § 275.205-3(a), (b), (d)(1) (Advisers Act qualified-client rule) — carry permitted only if each equity owner charged it independently qualifies; (b) is the per-LP look-through on every investor in the scout-led SPV. cfr-17-275-205-3-qualified-client.md
- 17 CFR § 275.206(4)-1(b), (e)(5) (Investment Adviser Marketing Rule) — the compensated-endorsement stack; cited by NEGATION (a private scout who neither solicits nor refers advisory clients is not making an "endorsement"). Attaches only if the scout drifts into promoting the adviser. cfr-17-275-206-4-1-marketing-rule.md
- 15 U.S.C. § 77q(b) (Securities Act § 17(b) anti-touting) — full disclosure incl. amount, only where content "describes such security for a consideration … from an issuer, underwriter, or dealer"; the trigger the non-publishing scout is argued to fall outside (the load-bearing move behind the 4→3 brand-risk correction). usc-15-77q-b-anti-touting.md
- In re Van Eck Associates Corp. (BUZZ ETF), IA Rel. No. 6560 / IC Rel. No. 35132 (Feb. 16, 2024), ¶¶2, 9–10 — undisclosed AUM-linked comp to a public promoter (flat 20% → up to 60% above $1.25B AUM). Distinguished: scout carry is private and non-touting, so the public-promoter firehose does not attach. sec-vaneck-buzz-2024.pdf
- AngelList / FundersClub SEC deal-partner no-action letters (2013) — the staff-guidance foundation for treating carry-on-exit to a bona-fide GP as non-transaction-based comp. Not in the primary archive — staff guidance, non-precedential, unverified proxy (see audit item above). not archived
Full archive and pinpoint mapping on the Sources page. Every legal characterization is counsel-gated.
Structures this fits under
Scout carry is a deal-side origination lever. It lives on the SPV-sponsor side of the platform, inside a bona-fide co-GP wrapper — never a relabeled distribution fee. It fits the following Layer 1 entity structures:
Sibling mechanism: Bona-fide co-GP / origination carry — same doctrinal footing, same −8.0 tier, shares the AngelList/FundersClub no-action proxy dependency. Contrast co-invest / GP-commit (at-risk own capital, not comp) and the outright unregistered capital-comp anti-pattern the collapse risk leads to. Back to the full mechanisms index.