I recently spent some time with a Seattle-based venture capital firm, Voyager Capital. Voyager is an early-stage venture firm that focuses on B2B opportunities primarily in the Pacific Northwest. What drew me to the firm is their very different approach to supporting entrepreneurs. They have a craftsman-like view for their investments, bringing in outside resources like Tom Kippola from the Chasm Group, Bruce Chizen former Adobe CEO, corporate coaching and on-boarding services from the Nofsinger Group. They should be on your list of firms to contact if you’re raising your first institutional round of financings. They've recently had some big exits such as Elemental Technologies to Amazon for ~$500M, and BlueBox to IBM.
OK, done with the plug.
A lot of people have asked me what it’s like to be an entrepreneur-in-residence (EIR). First, here is some definition around it. An EIR is typically a position that is given to a seasoned executive that is either a) trying get a new company off the ground within a VC firm or b) wants a platform to see deal flow where they can join a new early-stage company. The VC hopes that the EIR decides to join one of their portfolio companies.
The roles and responsibilities can vary greatly by different venture firms. In fact, the role and the compensation doesn't really have a standard best practice across firms. Here are some high-level ideas on what they do:
1. Compensation- some positions are paid and others are not. In addition, you have an opportunity to get adviser stock in addition to spending time with the VCs portfolio companies.
2. Roles - typically you are spending time doing the following:
a. Diligence - depending on your expertise and background, more than likely you will be asked to weigh in on potential investments. You could be asked to be present in the office, email, etc. Again, there is no standard practice. If you ever wanted to peak behind the curtain on how a venture capital firm works, these types of tasks become really fun.
b. Deal flow - the life's blood of a venture firm is deal flow. If you consider that 1% of the total investments that you are evaluating are successful (it fits your profile and you were able to have a signed term sheet from the entrepreneur), you've got to have a ton of deal flow. An EIR isn't a VC nor an investment professional. And while you should bring in deal flow, I wouldn't say that an EIR should be expected to bring in as much as the venture professionals.
a. Efficiency - you get maximum efficiency when looking at companies. Instead of hanging out at a Starbucks all day, you can meet a lot of interesting companies as they filter through the venture office. If you are interested in finding a new role, this could be a beneficial.
b.Playing “VC" - if you are interested in being a venture capitalist, it is a good way for you to see how the back-end interworkings of venture capital work.
c. Getting sharp - as an entrepreneur, you are very focused on being focused. You are laser-beam focused on your venture and, quite frankly, don't have a lot of time to think about other categories and opportunities. Like a VC, as an EIR you get to be horizontal from an investment perspective. You can be looking at virtual reality in one meeting, then e-commerce, throw in some travel, and, heck, add a dash of marketing SAAS -- all before noon. So you get a perspective of models and overall business assessment, while also picking up pretty good deal pattern recognition where you can evaluate an entrepreneur and their business very quickly. All good things to have whether you’re an operator or VC.
If you want to play like you are VC while staying active when looking for your next opportunity, I would highly recommend pursuing it.