The lack of disclosure that the scouts are agents acting on behalf of Sequoia is definitely wrong, though it is unclear if it&#x27;s the norm or the exception. However, the shell company that disguises the source of the investment from other investors does serve a useful purpose to the entrepreneur in minimizing signaling risk in the follow on round. If Sequoia invests in your seed round but passes on the subsequent series A, every other investor you&#x27;re talking to is going to wonder why one of the top VC firms is passing on the investment.