January 17, 2014
I’ve been entrepreneur-in-residence (EIR) at two academic institutions (the University of Illinois at Urbana-Champaign and currently, Northern Illinois University), and I had a similar role (but slightly different title) at Argonne National Laboratory. Lately people have been asking, “What does an EIR do?” There’s no unambiguous answer to this question, but I can shed some light on it.
In the classic case, an EIR is a position at a venture capital firm. Usually the EIR is an accomplished executive in between stints at companies, or, very commonly, someone who just exited from one of the portfolio companies of the firm. An EIR gets office space, some administrative support, a business card and maybe even a stipend. It is not meant to be a high paying job nor a permanent position, but the goal is for the EIR to create (or perhaps find) the next company that the VC firm will fund. In addition, the EIR may get asked to help out on due diligence and/or provide operational assistance to existing portfolio companies. The goal, however, remains: To develop a fundable concept that the VC firm can seed and which the EIR can run (or at least be co-founder). There are many variations on this theme, such as investing in an existing company, doing a roll-up, buying a distressed company, and so forth.
Another way in which an EIR might get hired at a VC firm is if they are a fundable executive but also have deep domain expertise in an area of thematic interest to the firm. For example, a VC firm might say to themselves, “With Google’s acquisition of Nest Labs, we really need to understand the opportunity around the Internet of Things and develop our investment strategy,” and then they might hire an EIR with the right skills to research the market, develop an investment thesis and then either find a deal or write a business plan for a new company. In this hypothetical example, the VC firm is too late to the party, however. The best VC firms see these trends emerging long before most people and are exiting just as the masses are rushing in. This, by the way, is my dream job.
At the University of Illinois, I worked for their captive venture capital arm, Illinois Ventures. The mission of Illinois Ventures was to do seed stage investing in technologies coming out of research laboratories. It was decided long ago that funding a graduate student or professor as part-time CEO is not a good idea. As EIR, I would be the business co-founder of the company along with, typically, a professor or group of professors.
The professors, obviously, were the technical leads and my job was to help craft an investable thesis, handle all of the foundational issues (corporate form, licensing the technology, setting up an option pool, recruiting the team, negotiating the seed round, etc.). Because I typically was running two or three businesses at a time (each 1-2 days/week), the startups got the benefit of a seasoned executive without paying full freight. Further, even if they tried to recruit someone full-time, they probably wouldn’t have been able to at that stage.
Often we weren’t even sure at that early stage which industry we were going to enter. As the businesses progressed and we moved toward a Series A round, we were then able to recruit a team with the domain expertise needed to take the companies to the next level. In some instances I then passed the baton to a new CEO, and in the case of Advanced Diamond Technologies, I stayed with the company and ran it for the next several years as full-time CEO. In one instance, I recommended to the investors that we shut down a company since the technology, in my opinion, would never be commercially viable.
At Northern Illinois University, where there aren’t many organic startups and the entrepreneurial culture is not yet ingrained, my job is to light the fire underneath the students and faculty to begin thinking more entrepreneurially about their work. I also assist with tech transfer, licensing and industrial partnerships.
At Argonne, where I was co-executive director of the entrepreneurship center (and de facto EIR), the goal was to mine the portfolio of technologies that Argonne had and identify those with the most commercial potential. From there, we would help form the companies in much the same way that an incubator might.
As you can see, there is no single definition for an EIR. To understand the EIR’s motives, you need to look to see who’s paying them. If it’s a VC firm, you can bet that sooner or later, the rubber will need to meet the road in a fundable opportunity. If it’s at a university, there may be other payoffs, such as faculty mentoring or student experience, that are the principal objectives.
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