What Is an Entrepreneur-In-Residence?
By Neil Kane, Energy Foundry Entrepreneur-In-Residence
Originally posted on Forbes
What is an entrepreneur-in-residence (EIR)? I’ve held this title at four different organizations and am taking it on again with Energy Foundry, so it is a question I’m asked frequently. There’s no unambiguous answer because the job has to fit the priorities of the institution, but I can shed some light.
Each of the times I’ve been an EIR, it’s been a newly created position. I’ve never had a predecessor, and in each case I wrote my own job description. Despite the name of the position being the same, the duties, responsibilities and compensation were different.
Traditionally, an EIR is a position at a venture capital firm. Usually the EIR is an accomplished executive whom the firm is willing to back financially. Often, an EIR is between stints running a company or someone who just exited from one of the portfolio companies of the firm. An EIR typically 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. The goal is for the EIR to create the next company that the VC firm will fund. Typically VC firms evaluate deals that come their way and part of their decision is based on whether the management team is strong enough to justify an investment. With an EIR it’s inverted—they already like the management. They just need to find the right vehicle.
An EIR may 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 support. Additionally, an EIR might have deep domain expertise in an area of thematic interest to the firm. For example, a VC firm might say to themselves, “We believe that distributed energy generation is going to be a megatrend, and we really need to understand the opportunity in the space and develop our investment strategy.” 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. The best VC firms see these trends emerging long before most people—and are exiting their investments just as the masses are rushing in.
At the University of Illinois at Urbana-Champaign, 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 in Illinois. When a professor or group of professors (or their students) developed an innovation that justified starting a company that Illinois Ventures wanted to fund (assuming there wasn’t already a credentialed leader in place), I became the business co-founder of the company.
The professors and their students were the technical leads, and I helped 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.) and figure out the business model. 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. We did this several times successfully at the University of Illinois and out of this work came SolarBridge Technologies and Semprius. [Disclosure: I still maintain an ownership position in each company. At Semprius I was an advisor and not the CEO].
With university-based innovations, one often isn’t sure at the founding which industry sectors the business is going to enter—nor is it certain what the business model is going to be. In this context the EIR is an all-around athlete who can wear many hats and add value in multiple ways. As the businesses progressed and we moved toward their Series A rounds, we were then able to recruit a team with the domain expertise needed to take the companies to the next level. Or, in one instance, I recommended to investors that we shut down a company since the technology, in my opinion, would never be commercially viable.
I was also co-executive director of the entrepreneurship center (and de facto EIR) with Argonne National Laboratory, where the goal was to mine the portfolio of technologies that Argonne had to identify those with the most commercial potential. From there, we would help form the companies in much the same way that an incubator might. In some instances I passed the baton to a new CEO, but in the case of Advanced Diamond Technologies [Disclosure: I have an ownership stake in this company], I stayed with the company and ran it for the next several years as full-time CEO.
Just recently I became an EIR at Energy Foundry, where I’ll identify ideas and technologies worthy of a deeper dive by the investment team and work on launching these into new energy ventures. The idea-rich University ecosystems are a natural place to start, so I would like to invite students, professors and tech-transfer offices to reach out about their early-stage energy technologies. The Energy Foundry team and I would be interested to learn about your venture and offer assistance where we can.
Neil Kane (@neildkane) is the president of Illinois Partners which helps companies, universities and investors with innovation strategies and technology commercialization.