I was an Entrepreneur in Residence for Sevin Rosen Funds from May 2005 through February 2006. It was a wonderful experience - one that ended up changing my career path from "entrepreneur" to "investor". I wanted to write a couple of articles about the experience to explain, first-hand, what it was like to be an EIR for a top-tier firm like Sevin Rosen Funds (SRF). This first installment will talk about the "Entrepreneur in Residence" title in general. Part 2 will discuss how we defined my specific role. Part 3 will close with some of the activities surrounding my particular instance of the title.
Part 1: A word about the title itself...
"An entrepreneur in what?"
That's what most of my friends and family would say when I told them my new title. Turns out, the Venture Capital community is small. As of May 2006, the NVCA1 has somewhere around 485 firms listed as members, with only about 8 investment professionals per firm (on average). Of those firms, only a small fraction have active EIR programs. So, at any point in time, it's hard to believe that there are more than a hundred EIRs in circulation on the planet. That makes the EIR title somewhat exclusive! As a result, nobody outside our industry has ever heard of such a title. Especially given that the title is not a "career" title. You get the title, hold it at most a year or so, then leave it behind when you move on. I.e., there are very few EIRs and they hold their title for a very short period of time. So, in terms of "Title-Years" (a term I just made up), being an EIR may be one of the rarest titles out there to hold. It's no wonder that they lay-person outside of Venture Capital has never heard of it.
I, for one, am proud to be a member of the EIR Alumni Club (if we had a club)...
You know it's a rare title when you type it into Wikipedia and see the top match being "Vacation property"! OK, add double-quotes. Now, the top match is Virvint Capital because they list an EIR as part of their management team. Digging down, we see a 2.3% Relevancy match in the Venture Capital topic where they say:
EIRs are experts in a particular domain and perform due dilligence on potential deals. EIRs are engaged by VC firms temporarily (six to 18 months) and are expected to develop and pitch startup ideas to their host firm (although neither party is bound to work with each other). Some EIR's move on to roles such as Chief Technology Officer (CTO) at a portfolio company.
Not much has been written about this elusive title. In researching for this article, I found that there are many consulting companies and schools that use the "Entrepreneur in Residence" title in ways other than I describe. For this discussion, I am limiting the scope of the title to EIRs working for Venture Capital firms.
You will also see references to "Executive in Residence" or "CEO in Residence". This allows for executives and CEOs who are not necessarily entrepreneurs (or who choose to emphasize their executive status over their entrepreneurial experience) to join a VC firm in a similar capacity to an EIR, so what I say here about EIR applies to them as well. My general experience is that you see more "Entrepreneurs in Residence" at VC firms, while the "Executive in Residence" and "CEO in Residence" is more often found at Private Equity (PE) firms. However, this is changing as more VC firms choose to keep the stash of known-quantity CEO's close for when a CEO needs replacing at a Portfolio company.
Here are a few choice links about the title (slim pickins, please add other good links in the Comments section):
- The San Francisco Business Times wrote a nice article titled "Great work... What it takes to become an entrepreneur in residence, the best job you can never apply for." They are right. The VC firm will find you if they are interested. They do not post these positions on a job board.
- Barney Pell (a fellow entrepreneur with me in the "My Way, The Entrepreneur Network"), was an EIR for Mayfield before starting Powerset.
- Jeff Clavier has a nice article on the EIR programs to enhance dealflow.
- And, the folks at Sevin Rosen Funds were kind enough to issue a Press Release about adding me to the team.
I've talked to quite a few other EIRs about their role within their sponsoring firm. The EIR title is a very nebulous one. Every Venture Capital firm is different and defines the role to suit their individual style.
- Some don't do EIR programs at all. Some do them frequently, with an ever-rotating entrepreneurial door.
- Some limit the participation to a single EIR at a time. Others will take on multiple entrepreneurs if the timing just happens to work itself out that way.
- Some only take on entrepreneurs that they have worked with before (maybe as a previous founder or key contributor at one of their portfolio companies, or someone that the Partner has worked with in a previous life). Others will take on entrepreneurs that they don't know, but are highly regarded as experts in an industry segment (particularly one that interests a General Partner of the firm!).
- Some restrict the access that the EIR has to the firm's operations. Others run it wide open and transparent.
- Some will keep an EIR in stealth mode with no public announcement. Others will issue a Press Release. Others will add the EIR to their web site.
- Some encourage the EIR to assist with the day-to-day operations of the firm. Others keep the two worlds separate.
- Some will compensate the EIR through the VC firm's management fees (with the EIR being a "consultant" to the firm). Others will choose to seed a company entity and use fund money instead of fee money.
Be sure to continue the story. Please read:
- Part 2: Accepting the title
- Part 3: A day in the life of
1Note: Not all VC firms are members of the NVCA. For this article, I assume that NVCA represents the "majority" of VC firms. Double the numbers for worst-case estimates. It would be great if the NVCA clarified their estimate of the percentage of the VC industry that are members currently (in the comments section below).
Tags: VC, Venture Capital, Entrepreneurship, Entrepreneur in Residence, EIR, NVCA, Sevin Rosen Funds, Brian Berliner, brianberliner