Photo: Boonsri Dickinson, Business Insider
But what does an “entrepreneur in residence” actually do? How did this idea start?
Here’s what you need to know.
Q. What is an EIR?
A. It’s an informal and usually temporary position at a VC firm. EIRs are not full partners and they aren’t usually looking for investments for the firm to make.
In a sense, it’s a sabbatical that serial entrepreneurs take while they figure out their next thing, instead of travelling the world.
Q. What do the entrepreneurs get out of it?
A. Usually, an EIR is between gigs and looking to join a hot company or looking for a team of people to start their next company with.
The EIR gets to meet a lot of people through the VC firm, and gets an inside track at raising money. Plus, they get to say they’re an EIR at a hot VC firm, rather than just Jane Smith — it makes it more likely that people will take meetings or pick up the phone.
Q. What do the VCs get out of it?
A. There’s a soft social agreement that says that whatever the entrepreneur decides to do next, the VC gets to take a look at it.
Also, an EIR might be meeting interesting startups or entrepreneurs that the VC would not otherwise know. Having more eyes and ears out there can help firms make better investments in early stage companies.
Q. What are some venture firms that have EIR programs?
A. Benchmark Capital was one of the first to set up an EIR program and has one of the most active programs.
Other firms that have EIRs include Accel Partners, Foundation Capital, Bessemer Venture Partners, Redpoint Ventures, Greylock Partners, Venrock, Norwest Venture Partners, Sutter Hill Ventures, and Trinity Ventures, investor Chris Farmer wrote on Quora.
Q. How long does it last?
A. Most EIR agreements are about a year, but vary depending on the firm and the individual.
One type is well-structured. It is usually 6 months to a year.
The second kind is where the firm and the person are trying to figure something out. It is more flexible. If either party realises it’s not a good fit, they part ways.
Q. What happens when the EIR wants to start his own company?
A. An EIR can go in with an idea, hash it out, and present it to the venture capital firm. If the EIR is successful, the firm might fund the idea.
Paul Davison recounted how he spun Highlight out of his position as an EIR at Benchmark:
“I got to know the Benchmark guys because Metaweb, where I worked for three years, got acquired …. I I wasn’t working on the investment side. Instead, I figured out what I wanted to build. I had an office there. I did whiteboarding and talked to people. During the ideation stage there is a lot of drawing, reading, and talking to people. And then the team side, I was meeting with interesting people who were in similar spaces to me. I came in with a bunch of ideas, that was basically stuff I jotted down in my idea journal over the years. My mind kept coming back to Highlight …. After a lot of sketching, drawing, and wire framing, I told Benchmark that this is what I’m doing and it’s time for me to raise money. It was incredibly helpful to have the Benchmark team around when questions came up or when you wanted to bounce product ideas off someone. I went to them and formally showed it to them … and they ended up investing in it.”
Q. How much do they get paid?
A. It depends.
In general, EIRs take a nominal salary. They also get a place to take calls and have access to a receptionist.
According to the New York Times, a 6 month EIR gig pays about $90,000. Michael Wolfe, a two-time EIR at Benchmark Capital, gave a higher figure — he wrote on Quora that most get paid between $120,000 to $150,000. We’ve heard the salary can be as high as $300,000.
Q. What are some companies to come out of EIRs?
A. There are many examples other than Highlight, like Linden Lab & Fanbase from Benchmark Capital and Cloudera from Accel Partners.
Q. Are there other things similar to EIRs?
A. Some firms have executives in residence. These are people like former CEOs looking for another leadership job that they will go into.
Another example is DJ Patil, the data scientist in residence at Greylock Partners.
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