Entrepreneur-in-Residence “EIR” Programs

For the past six months, I’ve met some very interesting entrepreneurs who at some point in their professional lives where an “entrepreneur-in-residence” (or “EIR”) for a venture firm. Generally, these individuals had started (and sold) at least two companies and had left the EIR position to pursue a third+ company. The more and more I’ve been thinking about the spectrum between entrepreneur and VC, I started to see the EIR as a role that maybe somewhere in the middle. But, I don’t know this field that well, so I started to ask around, and am trying to learn more. I’m reproducing below some parts of a dialog I’ve had with a really sharp (and nice) climate technology VC, who himself is the type of person that fits the EIR bill. My hope is to get more comments from folks who have opinions on the matter, and thanks in advance!

Here is the very sharp answer I got from my friend:

EIR programs are for experienced entrepreneurs who are planning to start another company but want to spend a bit of time figuring out what exactly they want to do. In reality this is a way for VCs to try to lock in great entrepreneurs to have a first look at their next gig, and for entrepreneurs to not be lonely while they dig through ideas etc. It also helps to have a look at a VC’s dealflow to get a sense of the market, and to have more immediate feedback from an investor on their own ideas.

Typical EIRs are those who are really creative and are more interesting in building something big and unique in a large space than just finding a technology and spinning it out (though that also happens successfully). VCs look for people who know what it means to (a) find a big idea, (b) build that idea into a business proposition, (c) build a team around it, (c) rally financing, and (d) are fit to be a part of the newco leadership. Most importantly, EIRs create their own business and are the sausage makers that all new businesses need in the beginning. Most often they either become the CEO or VP BD in those organizations. Very very infrequently do EIR positions convert into full-time VC roles.

EIRs are typically either (a) a successful entrepreneur, or (b) someone a particular VC partner really wants to work with. In either case, EIRs walk in with a bit of a heavy weight resume. If you have built a company and either successfully exited, or at least did something interesting with it, you at least have a shot. One or more VC partners have to want to back you…I don’t think EIRs are chosen without one of the partners raising their hand and saying if this guy come sup with something interesting, they would want to back him up. Often EIRs enter with some idea of where they would like to focus (and have some reason why they might be successful): eg I might be a candidate for an EIR in either chemicals or automotive space unless I could show I have an interesting view on some other space. 

 

Let me say it this way: if an EIR does not start a company within 12-18 months, he/she is probably looked at as someone who is either (a) one trick pony, (b) not really interested in doing a startup, (c) maybe not creative/entrepreneurial enough.