How To Create A Successful EIR Program
What makes for a successful EIR program? The key to success is limited time. EIR programs can be incredibly valuable for venture firms in terms of deal-flow, knowledge, and networking. But I suspect that many EIR arrangements result in unhappy results for the EIRs and for the firms that employ them. I have had the good fortune to have some very positive EIR experiences.
Partners are busy. They spend time looking at deals and working with portfolio companies, and before they know it, six or seven months have passed. During this time, the EIR has been hard at work thinking about new ideas, talking to people in industry, and even looking at a few deals. One of two things happens. Either the entrepreneur starts thinking he is a venture capitalist, or the entrepreneur is down the path on an idea that the venture firm can’t fully support.
A venture capital office can be a very comfortable place to work. More often than not, there’s good food, administrative support, and a lot of patience. The EIR is asked to “sit in” on a few deals and starts thinking that meeting with other entrepreneurs is actually more fun than trying to build something from scratch.
Some entrepreneurs look at the EIR position as an opportunity to sit back and think about an industry and their careers from a very distant perspective. It might even be an opportunity to reposition as something else. They might envision spending six months just thinking and then another six developing a company concept. This sort of stepping back is perhaps best done at a university getting an MBA or a PhD. As an entrepreneur, the goal is to get things done quickly and aggressively. A 12 month timeframe is simply not compatible with this requirement.
The best EIRs already have some idea of what they want to do, but they need a little time and some resources to determine whether their concept or concepts have merit. An EIR that has two or three ideas and is trying to narrow down to one to bet on is a great pick. This person knows that the market is moving forward without him and is eager to get going on one of the ideas.
The remaining challenge is when the venture firm has to tell the EIR that while they really like the EIR, they are not so enamored with the concept he has developed or settled on. How does it happen that the EIR has gotten down the path, potentially with a few team members, but without the support of the sponsoring partner? It’s because both the EIR and the partner fail to communicate.
As an EIR, your goal isn’t just to get potential industry partners and team members signed up; it’s to get the partnership on board to fund you. “We’ll do that deal as long as you can find another investor” is not what you want to hear. What you want is for the partnership to give you their full support. Your job is to sell the partnership on your company concept. That means meeting with partners individually and as a group on a regular basis to make sure they buy into what you’re doing. You need to enlist their support in recruiting team members and making contacts in the industry.
Conversely, from the partner perspective, the key to a successful EIR outcome is to be up front with entrepreneurs. Tell them how much time they have to work with, e.g. three or four months, give them an opportunity to update you every week or every other week, and an opportunity to update the partnership on a monthly basis.
Too much time you say? Then you’re not really making a commitment to the EIR process. Entrepreneur repeatedly not answering what you think are the key business issues? Be direct. Entrepreneur too focused on how to build the product rather than how they will get market buy-in? Again, face the issue.
At the time, it may seem like it’s easier to let the entrepreneur keep moving forward. But the problem is that if the entrepreneur spends six or seven months and then does not receive funding, that entrepreneur will walk away with a bad experience.
However, if the entrepreneur receives feedback and input, assistance and help from the partnership on an on-going basis, it’s much more likely that they’ll reach a successful outcome.
Schedule and milestones are critical. It’s true that the best entrepreneurs set their own milestones and schedule. The challenge is that, in the environment of a venture capital office, it can become confusing what the end goal is. It’s all about exit. The successful exit for an EIR is to create a fundable opportunity that the venture capital firm can invest in. The goal of the sponsoring partner is to provide the resources but also the firmness of deadline to enable that to occur.
Partners are busy. They spend time looking at deals and working with portfolio companies, and before they know it, six or seven months have passed. During this time, the EIR has been hard at work thinking about new ideas, talking to people in industry, and even looking at a few deals. One of two things happens. Either the entrepreneur starts thinking he is a venture capitalist, or the entrepreneur is down the path on an idea that the venture firm can’t fully support.
A venture capital office can be a very comfortable place to work. More often than not, there’s good food, administrative support, and a lot of patience. The EIR is asked to “sit in” on a few deals and starts thinking that meeting with other entrepreneurs is actually more fun than trying to build something from scratch.
Some entrepreneurs look at the EIR position as an opportunity to sit back and think about an industry and their careers from a very distant perspective. It might even be an opportunity to reposition as something else. They might envision spending six months just thinking and then another six developing a company concept. This sort of stepping back is perhaps best done at a university getting an MBA or a PhD. As an entrepreneur, the goal is to get things done quickly and aggressively. A 12 month timeframe is simply not compatible with this requirement.
The best EIRs already have some idea of what they want to do, but they need a little time and some resources to determine whether their concept or concepts have merit. An EIR that has two or three ideas and is trying to narrow down to one to bet on is a great pick. This person knows that the market is moving forward without him and is eager to get going on one of the ideas.
The remaining challenge is when the venture firm has to tell the EIR that while they really like the EIR, they are not so enamored with the concept he has developed or settled on. How does it happen that the EIR has gotten down the path, potentially with a few team members, but without the support of the sponsoring partner? It’s because both the EIR and the partner fail to communicate.
As an EIR, your goal isn’t just to get potential industry partners and team members signed up; it’s to get the partnership on board to fund you. “We’ll do that deal as long as you can find another investor” is not what you want to hear. What you want is for the partnership to give you their full support. Your job is to sell the partnership on your company concept. That means meeting with partners individually and as a group on a regular basis to make sure they buy into what you’re doing. You need to enlist their support in recruiting team members and making contacts in the industry.
Conversely, from the partner perspective, the key to a successful EIR outcome is to be up front with entrepreneurs. Tell them how much time they have to work with, e.g. three or four months, give them an opportunity to update you every week or every other week, and an opportunity to update the partnership on a monthly basis.
Too much time you say? Then you’re not really making a commitment to the EIR process. Entrepreneur repeatedly not answering what you think are the key business issues? Be direct. Entrepreneur too focused on how to build the product rather than how they will get market buy-in? Again, face the issue.
At the time, it may seem like it’s easier to let the entrepreneur keep moving forward. But the problem is that if the entrepreneur spends six or seven months and then does not receive funding, that entrepreneur will walk away with a bad experience.
However, if the entrepreneur receives feedback and input, assistance and help from the partnership on an on-going basis, it’s much more likely that they’ll reach a successful outcome.
Schedule and milestones are critical. It’s true that the best entrepreneurs set their own milestones and schedule. The challenge is that, in the environment of a venture capital office, it can become confusing what the end goal is. It’s all about exit. The successful exit for an EIR is to create a fundable opportunity that the venture capital firm can invest in. The goal of the sponsoring partner is to provide the resources but also the firmness of deadline to enable that to occur.
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