Having an entrepreneur in residence offers several advantages for VC firms. These include:
- Assistance with pitch reviews and due diligence, using the entrepreneur’s expertise and contacts.
- Access to early-stage investment opportunities that might not otherwise be available to the VC firm.
- On-hand consulting for the VC’s portfolio companies.
- Early access to the entrepreneur’s new venture.
- Using the entrepreneur (or their contacts) for leadership positions in existing portfolio companies.
The only real drawback to hiring an EIR is that it costs money to do so. However, given the short-term contract and the ability of the EIR to add value, hiring an entrepreneur in residence is seen as a low-risk, win/win strategy.
For the entrepreneur, being an entrepreneur in residence means broadening their network, getting insight into the VC (or other organization) that they’re working with, and gaining new experiences and perspectives.
Non-VC firms should carefully consider their reasons for hiring an entrepreneur in residence as these may not be purely financial. For instance, a university might hire an entrepreneur in residence not to directly bring in more money but instead to help students grow their understanding of and engagement with entrepreneurship.
