EIR model: money first, then the idea
Venture investors have long realized that it is more profitable to give money not for ideas or projects, but for specific people. When an investor appears in the face of a competent person in whom they believe, then his project can and should be financed even if the financier doesn’t understand the idea at all.
The new venture fund Foundation Capital program is held under the slogan "We are happy to lend you money." If an enterprising specialist is located, he is given a monthly stipend of up to $ 15,000 and is allocated a workplace in the office for about six months. Then they ask if he has invented anything. If something has turned out to be worthwhile, then the company gets the right of the first investment. This is the so-called model of “full-time entrepreneurs” (entrepreneur in residence, that is, EIR).
Other venture capital investors are gradually introducing EIR programs. Last year, EMC bought Data Domain for $ 2.3 billion (the largest venture start-up in 2009). The company Data Domain was based on the same scheme. The specialist (Kai Li) quit his job and did not know what to do. By chance, he met a friend from the venture fund New Enterprise Associates , who gave him money and a job to think about the idea of ​​some business. As a result, Data Domain was born.
Thanks to the EIR scheme (money first, then the idea), successful startups were created earlier, including MetroPCS (it grew to $ 1.2 billion), Zimbra (sold to Yahoo for $ 350 million in 2007). In general, such a venture investment model appeared in the early 80s of the last century specifically to finance literate people who were temporarily out of work. But in the last few years, this scheme has become particularly relevant. Now even in many business schools, for example, at Harvard, there are similar programs. The talent hunt is heating up to the limit.
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via NY Times
The new venture fund Foundation Capital program is held under the slogan "We are happy to lend you money." If an enterprising specialist is located, he is given a monthly stipend of up to $ 15,000 and is allocated a workplace in the office for about six months. Then they ask if he has invented anything. If something has turned out to be worthwhile, then the company gets the right of the first investment. This is the so-called model of “full-time entrepreneurs” (entrepreneur in residence, that is, EIR).
Other venture capital investors are gradually introducing EIR programs. Last year, EMC bought Data Domain for $ 2.3 billion (the largest venture start-up in 2009). The company Data Domain was based on the same scheme. The specialist (Kai Li) quit his job and did not know what to do. By chance, he met a friend from the venture fund New Enterprise Associates , who gave him money and a job to think about the idea of ​​some business. As a result, Data Domain was born.
Thanks to the EIR scheme (money first, then the idea), successful startups were created earlier, including MetroPCS (it grew to $ 1.2 billion), Zimbra (sold to Yahoo for $ 350 million in 2007). In general, such a venture investment model appeared in the early 80s of the last century specifically to finance literate people who were temporarily out of work. But in the last few years, this scheme has become particularly relevant. Now even in many business schools, for example, at Harvard, there are similar programs. The talent hunt is heating up to the limit.
')
via NY Times
Source: https://habr.com/ru/post/85956/
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