The Entrepreneur in Residence (EIR) program used to be specifically tailored towards venture capitalists. However, as more people have learned about the program and its features, other types of organizations have begun adopting EIRs into their businesses as well.
Although Entrepreneur in Residence programs are growing in popularity, it is still challenging to put a finger on the responsibilities attached to the position.
The original purpose of the EIR program was to serve as an avenue for venture capital firms to get information from skilled, experienced professionals. The firm would gauge the extent of the experience gap and then look for an entrepreneur to fill that hole. But the role of an EIR has now changed to fit different types of companies.
Here, we’ll explain everything you need to know about an Entrepreneur in Residence program and the way in which it contributes to organizational growth.
What is an Entrepreneur in Residence Program?
Traditionally, the goal of the Entrepreneur in Residence program is to create the next idea that venture capital will back financially. Without an EIR, venture capital (VC) firms would have to evaluate different management teams and find one they like.
With an EIR program, they’re already on board with the management team. The relationship exists to find the best investment vehicle. In some cases, the VC firm may also bring the EIR on board to run existing companies. While that’s the traditional concept of an EIR, there are situations where the role changes to an advanced consultancy role. Various companies in different business niches can run an Entrepreneur in Residence program. The program is appealing to these companies because it brings an entrepreneurial mindset to the business. However, because most companies are still trying out the program, there is no clear job description. The role of an EIR usually depends on the services a company offers and what they need.
For instance, consider a car parts manufacturer looking to arrest a recent slump in sales. If the company wants to bring in an EIR to assist, they are not looking to hire their typical engineer with technical knowledge. Instead, what they need is an entrepreneur with sales experience. Similarly, a pharmaceutical company may hire an EIR for law-related responsibilities. In short, the role of an Entrepreneur in Residence doesn’t have to align with the company’s primary products or services.
There are two types of personalities that suit an EIR position:
As the name implies, an EIR, in most cases, is an experienced entrepreneur. Aside from having broad experience and knowledge in a particular niche, the entrepreneur must have a track record of success.
The company looking to hire an EIR has a goal they’re projecting to achieve. Naturally, they’ll be looking to hire someone who has succeeded in that area.
An executive is a person who has considerable experience working in a decision-making capacity. If you’re an executive with proven accomplishments, you can perform excellently as an EIR. However, as an EIR in a company, you’ll need a lot of financial support from the firm since you’ll need to take a lot of financial risks.
You’ll also need to bring your skills in closing deals to the table. And if your objectives relate to growing a portfolio company, your networking and leadership experience will be important.
Types of Entrepreneur in Residence Programs
Entrepreneur in Residence is an idea growing beyond borders across the country. The Texas Senate recently passed a bill that supports the existence of EIR in the state. With this bill, the Texas government is looking to foster more growth in the private sector.
Just like Texas, more authorities and companies are taking the concept of an EIR seriously. As a result, the spectrum of the position is widening even further.
Despite the vast roles an EIR can play, we can group this program into three forms:
The government can sponsor EIR initiatives to help entrepreneurs. Recently, U.S. Citizenship and Immigration Services (USCIS) launched an initiative to make immigration easier for entrepreneurs. The government and related bodies use these programs to drive entrepreneurship and creativity in a country.
As a government engages with EIRs, they are altering the way the country is perceived by potential investors. This idea is powered by the fact that they can see practical examples of entrepreneurial success. With trust in company potential, investments will increase.
EIR in the Community
Most of the time, an EIR in a community is there to make an impact on the environment. One way they can do this is by creating a non-governmental organization. The EIR’s role involves sacrificing their time and contributing their experience to impact the community.
Sometimes the role of an EIR in a community is dependent on the unique needs. The community may desire improvements in knowledge and skill about a subject matter. They may decide to invest heavily in education and therefore bring in an expert to share experience on the subject matter.
For instance, let’s assume a community decides to learn about data science. They may decide to enlist an individual or company to teach the community about the topic. The third-party individual or company who comes through to teach data science is playing the role of Entrepreneur in Residence for the community.
It’s the same principle for business schools. When working with a school, the EIR is the professional who guides students looking to get their ideas for future companies off the ground. They’ll support such students by offering expertise, experience, and real-world knowledge.
By assisting in developing new ideas, an EIR in a school setting can actively contribute to the education of students who will manage sustainable ventures.
EIR in an Organization
An Entrepreneur in Residence program is most common in corporate organizations. In most cases, the goal is to optimize the company’s business and operational processes.
It might be that the organization is struggling with sales and needs a fresh idea. Or maybe the company needs an EIR to offer expertise and experience over another matter unrelated to its primary services.
Within a corporate organization, there are two forms of EIR programs:
An Internal Entrepreneur in Residence
The Internal Entrepreneur in Residence is a person inside the business who does research on a different method to work towards the company’s goals. The EIR can then offer a new perspective to company processes.
If the EIR believes in the research and potential of the result, they can present it to the company. Sometimes, it’s in the EIR’s place to spearhead the new process and train other colleagues. If this new system works, it becomes a company-accepted process.
If you own a company, you’ll want your internal EIR to be someone with the mind of an entrepreneur. An entrepreneur will take risks that a corporate worker may never take. Calculated risks can be the key to driving growth.
External Entrepreneur in Residence
When it comes to an external EIR, the person is not a member of the organization. In most cases, the external EIR is an entrepreneur or executive with proven success in a particular field.
The primary goal of the external EIR is to give honest opinions about the company’s business model or process. The external EIR may not be the average employee’s favorite person due to the brash honesty and change they’ll bring to the table, but ultimately those employees usually see the benefits once the change is made. Because the role of an external EIR is one relying on a contract, the external EIR has the freedom to make suggestions without the fear of losing a job. Those suggestions can often be a game-changer for a business.
What are the Functions of an Entrepreneur in Residence?
The functions of an Entrepreneur in Residence can continuously evolve to align with what a company wants. Some of the primary tasks include:
Create and Manage New Firms
A venture capital firm provides funding to emerging companies or startups with growth potential. The idea is to invest time and money for exponential growth. Sometimes, even after substantial investments, a startup may not grow as expected.
To avoid making such investment mistakes, a venture capital firm can hire an Entrepreneur in Residence. The primary goal of the EIR will be creating startups to solve existing problems.
In addition to creating a startup, the EIR may manage the company towards success. For an EIR with the responsibility of heading a startup, previous experience is essential.
Generate Better Operating Methods
A company already in the operational stage sometimes realizes its operating methods are not as effective as they should be. In that situation, the company will hire an EIR with a proven record in operational management. The Entrepreneur in Residence will pioneer smoother operations without reducing product or service quality. The EIR position comes with a certain amount of autonomy. That means an Entrepreneur in Residence can analyze the operations that go into satisfying client needs and discover new ways to improve customer satisfaction. Sometimes it may require the EIR to streamline operations at the granular level for that to happen.
For example, tech giants like Google may have an EIR that works with small businesses to optimize their website efforts. The EIR can go as far as providing advice to small businesses looking to maximize Google services.
Another example may involve a portfolio company that is having issues with fulfillment. The job of the EIR would be to explore the fulfillment process and vet it for inefficiencies.
Conducting research in order to make improvements is a constant factor for growth in any forward-thinking company. A business may choose to hire an EIR with good research experience to help them fill this need.
The primary function of the EIR will be to look for opportunities in which the company can pursue and excel. This research should also help the company discover diversification opportunities in its field.
Offer Experience and Expertise
Regardless of the industry an EIR works in, experience and expertise are two elements the position brings to the table. It’s important for a company to hire an entrepreneur who has the right experience that can be employed positively towards the success of the business.
To get a portfolio company where it needs to be, an EIR may have to master the role of a temporary tutor. In this case, a company is seeking training in order to streamline operations or pivot production methods to increase efficiency.
The Entrepreneur in Residence may also be tasked with the job of bringing employees up to speed on company projects. Or they may be asked to evaluate ways to maximize the strength and skill set of company staff for increased productivity.
The MVP internship program at Harmony Venture Labs is an example. An EIR can be useful in providing interns with hands-on mentorship that will help those students find success in future full-time positions.
How Much Does an Entrepreneur in Residence Earn?
As you would expect, the salary of an Entrepreneur in Residence depends on a lot of factors. However, the pay is usually on the high side due to the high level of expertise that the person brings to the company.
According to The New York Times, an Entrepreneur in Residence may earn up to $15,000 every month. ZipRecruiter puts the average annual earnings for an EIR in the USA at $85,000.
While the salary of an EIR sounds nice, it takes years of experience and hard work to get to that position. The following factors may impact whether you earn higher than the national average:
- The requirements and policy of the company
- Your negotiation prowess
- The contract agreement
- The location of the company
How Does the Entrepreneur Benefit as an Entrepreneur in Residence?
Depending on the company involved, the Entrepreneur in Residence program can benefit from the role in many ways. Some of these include:
- Exposure: The entrepreneur may be exposed to certain concepts and opportunities only offered in an EIR program.
- Creative mindset: A good EIR program will help the entrepreneur hone their creative skills.
- Growth: The entrepreneur will experience personal and business growth throughout the program.
- Incubation: Some organizations provide the resources and nurturing environment for entrepreneurs to develop their own ideas to fruition.
How Do Venture Capital firms benefit From an Entrepreneur in Residence Program?
For a venture capital firm that hires an Entrepreneur in Residence, there are numerous benefits.
The pressure on the management team to improve a portfolio company’s fortunes may be too much. An EIR will be able to help shoulder that burden.
When you have a great EIR, one benefit is new ideas from an outside resource. In most cases, an EIR is coming with experience from a previous job or business. As a result, they can quickly identify what’s going wrong in your company and offer refreshing strategies.
As we’ve mentioned, an EIR should have an entrepreneurial mindset that’ll allow them to identify product gaps, new target audiences, and other opportunities to increase revenue.
Whether for a venture capital firm, a government body, a community, or a private business, the Entrepreneur in Residence program has its benefits. As we’ve explained, Entrepreneurs in Residence can take on many roles. However, there’s really only one role the company will have to play as a cooperative organization open to changes. They must understand how important it is to listen to the insights and suggestions of the EIR. The impact that the EIR program has on the company will be maximized when both parties can align smoothly.
If you would like to learn more about EIR programs and how they are impacting real-world companies, Harmony Venture Labs is a great resource. Our entrepreneurial experts can help you discover if an EIR may be right for your business.