Monday, March 1, 2010

Entrepreneurs in Residence and VCs

It seems that finding venture capital is getting even harder. With tons and tons of entrepreneurs and inventors out there looking for funding for their big ideas, some venture capital firms are looking away from them and into their own firms. The VCs are hiring entrepreneurs with a track record to become an entrepreneur in residence. The "EIRs" are given an office and a salary to sit and think up new great ideas for businesses. The VCs are looking for these EIRs to come up with something "disruptive."

This reminds me of Hollywood, where producers just keep going with the same directors and redoing the same types of movies - trying to be safe to ensure a profit. (How many Batmans can they make???) That is not how you get breakthrough brilliance. That's not how you get an original Star Wars or a Google or an Amazon or even a Xerox. I've worked with serial entrepreneurs -- not every idea is a winner - but they get funding because they had a winner once upon a time. I think VCs are making a mistake with the EIRs. They should be trolling for the hidden great ideas that are out there among the unknowns.

There's a long article about EIR in The New York Times, with a particular focus on Foundation Capital in Silicon Valley in California. Here's a link to the article  -

http://www.nytimes.com/2010/02/28/technology/start-ups/28eir.html
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