Thursday Apr 24, 2014 by Rob Go - Co-Founder and Partner, NextView Ventures
Not sure why, but over the last few years, quite a few people I know took on EIR roles at various VC firms in both the East Coast and in Silicon Valley. Overall, there are positives and negatives to being an EIR. The positives are kind of obvious:
The negatives are relatively well known too. Mainly, they revolve around the signaling and reduced optionality that the entrepreneur may give up by hitching themselves to one firm over others even if that firm has no official rights associated with financing that entrepreneur’s company.
Personally, I don’t feel that strongly one way or another that entrepreneurs absolutely should or shouldn’t consider EIR opportunities. But watching a number of folks go through this, there is another, less obvious downside to the EIR role: it becomes hard to avoid absorbing the negativity of the VC process.
I’ve said before that one of the downsides of Venture Capital is that it tends to be a negative job. You say “no” all day long, you spend the most time on companies that are struggling, etc. VC’s get really good at analyzing investment opportunities and pointing out all the reasons why an opportunity won’t work, or is too high risk, or is too expensive, or is deficient on a dozen other dimensions. It’s hard to avoid this when investing is your day job and you say “no” 99% of the time, but I think it’s not necessarily the most helpful atmosphere for entrepreneurs that are trying to figure out a company to start. Even just hearing the internal chatter about companies can be a bit toxic, but on top of that, EIR’s end up getting pulled into specific discussions around companies, and sectors, and even sit in on company pitches in their areas of expertise.
All of these probably seem like a selling point to founders, who would be eager to expand their horizons and understand how the capital side of the innovation business works. And for some founders, it probably does help. But I think many if not most founders will find it difficult to absorb the learnings of Venture Capital as an EIR without also becoming much more critical and overly-analytical about the companies they are looking to start.
All that said, here are some other suggestions for entrepreneurs who do think an EIR gig is a fit, but want to avoid some of these challenges:
Rob Go is a Co-Founder and Partner of a seed investment firm called NextView Ventures. You can find this post, as well as additional content on his blog called robgo.org. You can also follow Rob (@robgo) on Twitter by clicking here.