It’s all coming out now.

Andreessen Horowitz Partners has just confirmed that it too has been operating a stealthy scout program.

In case you missed it, last week we uncovered a little-known trend of VCs secretly investing in cash-poor, network-rich entrepreneurs who in turn invest that money in other entrepreneurs as angels.

The idea is certainly innovative and makes a lot of sense given the macro trends we outlined in our original post. The only problem was a cloak of secrecy that made some entrepreneurs (and us) wonder what the big firms were hiding.

In a call with PandoDaily, AH partner Ben Horowitz said the only reason the firm kept the program a secret until now was to avoid the negative signaling that was getting venture firms in trouble with seed investing to begin with.

Venture capitalists commit far less money to seed deals and typically don’t get heavily involved with the companies. That means the bar is necessarily lower for a seed deal than a Series A. Because of the natural constraints of a firm, VCs will only wind up funding a subset of their seed deals when it comes time for the Series A. If Andreessen Horowitz has invested in the seed round and chooses not to re-up for the Series A, it can hurt the company.

That is unfortunate, because frequently it’s not the company that’s the problem. The firm may simply have too much exposure to a certain category or a competitive deal that it has already invested in. That was the case with Andreessen Horowitz’s seed investment in Instagram and subsequent inability to invest in the company’s later rounds. Scouts are a clever hack, giving VC firms a way to see more early deal flow without burdening the startup with their brand names.

Andreessen Horowitz’s program has been in existence for about nine months and was inspired by Sequoia Capital’s program that Sequoia confirmed to us for the first time last week. “We heard about Sequoia doing it and we thought it was a good idea,” Horowitz says. “We don’t do it very broadly, but the basic idea is there are angels who are smart who don’t have that much money. We believe offering more seed funding for entrepreneurs in a way that’s not disruptive to the ecosystem is a pretty good idea.”

Horowitz noted that this is just one example of plenty of stealthy things Andreessen Horowitz does to get better deal flow. “We’re doing stuff all the time,” he says. “We meet people. We talk to entrepreneurs. We make friends with people and invite them to parties, and they are great parties. We do a great speaker series. This is how the ecosystem works. We do stuff for people, we help them with things. In exchange they have a good feeling about us and send deals our way. The only reason we don’t make it transparent is because of this signaling issue.”

The firm is mostly experimenting with its scout program for now, Horowitz says and doesn’t have immediate plans to expand it. “We think it’s a good thing, but we’re open to other arguments,” he says. “If someone made a strong argument for why it wasn’t a good thing, we’d stop doing it.”

Horowitz was more open than Sequoia on the details of the program, and it appears to operate a little differently. So far there are only four scouts, and Andreessen Horowitz has invested “less than $1 million” in each of them. (Horowitz declined to name them.) The structure is identical to how limited partners invest in a venture firm. This is essentially just a one-man micro-VC with one LP. That LP just happens to be a venture firm.

Sequoia’s program is different. It operates the back-end administration for the scouts and allows the scouts to keep the majority of the proceeds from investing. In some ways Andreessen Horowitz’s way of doing it is less mysterious because it’s the exact same structure that already exists in the venture world. But in some ways it’s more secretive: The wire transfers come from Sequoia Capital, but in the case of Andreessen Horowitz, they come from the micro-firm that has been set up.

It’s more likely there are startups walking around with Andreessen Horowitz money who have no idea, the same way I couldn’t tell you who the LPs are in the institutional seed funds who invested in PandoDaily. “Since there’s no flow of information between us, I can’t think of a reason why anyone would care we made the investment,” Horowitz says.

There’s one group that has had some issues with these programs: Competing angel investors who’ve made their own money and complain scouts are getting an unfair boost into the angel ecosystem so a VC can get better deal flow on the sly. Boo hoo, says Horowitz. “Lately a lot of people are complaining that they have to compete,” he says. “‘Gee, we have a civil right to sit on our asses and do no work and make a lot of money.’ We don’t have a lot of sympathy for that argument. The cry babies of Silicon Valley. They don’t want to distinguish themselves by the work that they do, but by the money that they have. If we can be on the other side of that, that’s where we want to be. And you can quote me on that.”

[Just a reminder, Horowitz is our next guest at PandoMonthly. Expect us to talk more about the industry's competitive dynamics on stage June 20 and expect f-bombs to fly. Follow us on Twitter for ticket information.]

(Disclosure: Andreessen Horowitz partners Marc Andreessen and Jeff Jordan are angel investors in PandoDaily.)