March 1, 2010 at 16:43EIR model: first money, then idea
Venture investors have long realized that it’s more profitable to give money not for ideas or projects, but for specific people. When an investor shows up as a competent person in whom they believe, then it is possible and necessary to finance his project, even if the financier absolutely does not understand the idea.
The new Foundation Capital venture fund program is under the slogan “We are pleased to lend you money.” If there is an entrepreneurial specialist, then he is given a monthly stipend of up to $ 15,000 and a workplace in the office is allocated for about six months. Then they ask if he came up with something. If you get something worthwhile, then the company receives the right to first investment. This is the so-called model of “full-time entrepreneurs” (entrepreneur in residence, that is, EIR).
Programs for EIR are gradually being introduced by other venture investors. Last year, EMC bought Data Domain for $ 2.3 billion (the largest sale of venture startups in 2009). Data Domain was founded in exactly the same way. The specialist (Kai Li) quit his job and did not know what to do. By chance, he met a friend from the New Enterprise Associates venture capital fund , who gave him money and a job to think about the idea of a business. The result was Data Domain.
Thanks to the EIR scheme (first money, then the idea), successful startups were created earlier, including MetroPCS (already increased to $ 1.2 billion), Zimbra (sold to Yahoo for $ 350 million in 2007). In general, such a model of venture investments appeared in the early 80s of the last century specifically to finance literate people who were temporarily unemployed. But it was in the last few years that this scheme has become especially relevant. Now even in many business schools, for example, at Harvard, similar programs operate. The hunt for talents is heating up to the limit.
via NY Times
The new Foundation Capital venture fund program is under the slogan “We are pleased to lend you money.” If there is an entrepreneurial specialist, then he is given a monthly stipend of up to $ 15,000 and a workplace in the office is allocated for about six months. Then they ask if he came up with something. If you get something worthwhile, then the company receives the right to first investment. This is the so-called model of “full-time entrepreneurs” (entrepreneur in residence, that is, EIR).
Programs for EIR are gradually being introduced by other venture investors. Last year, EMC bought Data Domain for $ 2.3 billion (the largest sale of venture startups in 2009). Data Domain was founded in exactly the same way. The specialist (Kai Li) quit his job and did not know what to do. By chance, he met a friend from the New Enterprise Associates venture capital fund , who gave him money and a job to think about the idea of a business. The result was Data Domain.
Thanks to the EIR scheme (first money, then the idea), successful startups were created earlier, including MetroPCS (already increased to $ 1.2 billion), Zimbra (sold to Yahoo for $ 350 million in 2007). In general, such a model of venture investments appeared in the early 80s of the last century specifically to finance literate people who were temporarily unemployed. But it was in the last few years that this scheme has become especially relevant. Now even in many business schools, for example, at Harvard, similar programs operate. The hunt for talents is heating up to the limit.
via NY Times