An entrepreneur in residence (EIR) describes an entrepreneur that is recruited by a venture capital firm to develop a new business and to ensure the investment company has a steady stream of promising start-ups to support.
Understanding entrepreneurs in residence
The EIR position is transitional, short-term, and intended to enable the founder to locate their next role while still working for the VC firm.
Over a period of 6 to 12 months, the entrepreneur provides expertise to the company and receives support for their future endeavors in return.
In addition to venture capital situations, many other organizations are now utilizing the entrepreneur in residence concept for advice on business models, company culture, and potential business relationships or partnerships.
This includes educational institutions such as MIT, Cornell, and Harvard which use EIRs in advisory roles to teach students how to turn their innovative ideas into businesses.
Tech companies such as Cisco and some government agencies are also benefitting from the concept.
What is the role of an entrepreneur in residence?
The entrepreneur in residence assists with operational due diligence across one or multiple companies in the VC firm’s portfolio.
Whatever the intention, however, it’s important to note that the roles and responsibilities of the EIR are specific to the needs of the firm.
Benefits of entrepreneurs in residence
Here are some of the obvious and not-so-obvious benefits of EIRs:
Time and flexibility
Investment companies that support successful start-ups naturally want the entrepreneur to create other businesses it can fund.
This process takes time, but an EIR who has access to company funds and influence over the transitional period ensures it has another investment opportunity ready to go when required.
This is particularly true of those who have founded multiple start-ups.
Some companies consult with EIRs to clarify which start-ups they should work with and which should be sold.
Talent retention and industry influence
Some VC firms may offer successful EIRs a permanent position to limit the competition they would potentially create if working for another company.
Permanent positions allow the firm to retain talent and increase its industry influence.
- An entrepreneur in residence (EIR) describes an entrepreneur that is recruited by a venture capital firm to develop a new business.
- In addition to venture capital situations, many other organizations are now utilizing the entrepreneur in residence concept. These include universities, government agencies, and tech companies.
- Entrepreneurs in residence ensure the investment company has a steady stream of promising start-ups to support. These companies can also leverage the EIR’s professional network and ability to recognize profitable investments.
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