What Is an Entrepreneur in Residence? Definition and Duties | Indeed.com

What Is an Entrepreneur in Residence? Definition and Duties

Updated November 30, 2022

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Venture capital firms usually consist of a group of individuals who invest in startups with long-term growth potential. When a startup becomes more profitable, the venture capital firm might decide to sell it and appoint the founder as an entrepreneur in residence. An EIR is a transitional position that allows the founder to find their next project while working for the venture capital firm. In this article, we explain what an entrepreneur in residence is and how they can benefit organizations.

What is an entrepreneur in residence?

An entrepreneur in residence is a temporary role where the individual provides a company with their expertise, whether that's investment advice or counseling for a new startup. In return, the company provides the individual with support for their future endeavors, usually an opportunity to launch a new startup. The length of the position tends to be anywhere from six months to one year, but it can vary. Venture capital firms are among the most common organizations that employ EIRs. In addition to venture capital firms, you may find EIRs at organizations like:

Large corporations
Nonprofits
Business schools
Law firms
Private equity firms

Related: What Is a Startup? Everything You Need To Know About Startups

What does an entrepreneur in residence do?

An entrepreneur in residence uses their expertise to fulfill the organization's goals by offering insight into the startup process. For instance, if the organization needs to invest in new opportunities, EIRs can use their networks to connect the firm with startups. They can also provide expert advice about startups the organization is currently funding, whether they need help with the initial development stages or product launch.An EIR's role can also depend on their experience. If they have experience in finance, for instance, they may advise the organization on investment opportunities. Their expertise can help the firm make wise decisions about which startups to fund. Other EIRs may be more useful by revising the organization's management strategies, allowing it to more effectively oversee its startups. Entrepreneurs in residence working for business schools can help students form and complete their own entrepreneurial goals.

What is the importance of an entrepreneur in residence?

The entrepreneur in residence role is important because the position serves as a transitional period that allows professionals to find their next opportunity. While they work for the organization, they can explore different projects and build their networks. They also gain relevant experience and benefit from being able to include "entrepreneur in residence" on their resume. Additionally, the firm usually listens to their pitches, meaning they don't have to seek out funding for their next project. If the firm likes their idea for a new startup, the EIR receives the funding and leaves the temporary position.The flexible nature of an EIR is another reason why the position is important. The entrepreneur receives a salary, but the organization only expects them to remain in their role until they start their next project. This flexibility gives entrepreneurs the support they need to develop new ideas without requiring them to commit to a role. While an EIR position is usually temporary, it can become a permanent position if an entrepreneur wants to focus on helping other startups instead of starting another project. Permanent EIRs are usually experienced executives who want to share their knowledge with new entrepreneurs.Related: How Startup Funding Works and the 8 Startup Funding Stages

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Organizational benefits of an entrepreneur in residence

Benefits of having an entrepreneur in residence in an organization include:

Increase industry influence

If a venture capital firm sells a successful startup, the entrepreneur may want to replicate their success by exploring other projects. Firms often want to keep employing an entrepreneur to limit the competition they might create. They might look for a permanent position to entice the entrepreneur to remain in their organization. Even there is currently no open permanent position, a firm can hire an entrepreneur as an EIR until a position becomes available. By hiring an entrepreneur as an EIR, firms can retain talent and increase their industry influence.

Give the entrepreneur time to work on their next startup

When an organization supports a successful startup, it may want the entrepreneur to create other companies that it can fund. Because this process can take a while, the entrepreneur can become an EIR during the transitional period. They develop their ideas using the company's resources and networking, ensuring the firm has a successful opportunity to invest in by the end of the EIR term.

Put the entrepreneur in a leadership role

While many entrepreneurs want to create another startup, some might want to work with an existing company. Firms often prepare EIRs for leadership roles in other startups by exposing them to the industry and developing skills like communication, strategic thinking and management. This option is popular because entrepreneurs get to learn about a new company, and it benefits the firm because it knows someone it trusts is leading one of its startups.Read More: 10 Effective Leadership Skills To Lead a Team

Grow the firm's network

EIRs often enjoy their roles because they obtain access to the firm's network of investors and clients, but an EIR can also provide a firm with their valuable connections. From their experience as startup founders, they likely know investors and other startups that would be valuable to the firm. They can connect these parties to launch new startups and facilitate long-lasting relationships that grow the firm's network even further.Read More: The Benefits of Networking: 14 Reasons To Start Your Network

Get investment advice

EIRs tend to be the previous owners of successful startups. Their experience means that they know what a company needs to generate profits and outperform the competition. Many organizations obtain expert insight from EIRs to determine which startups the organization should work with and which ones it should sell.

 

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