Raj accepted an EIR position with Foundation Capital. Such arrangements typically have the EIRs reviewing business plans and providing their own technical expertise to any of the VC’s portfolio companies, while incubating a new startup of their own. Below, he explains some of the general terms for being an EIR, including his role with Foundation.
SM: Can you share with us some of the terms of your EIR? RV: I’d spend 6 months or so at Foundation, with the possibility that it could be less if we were really moving fast, and could be slightly more if we weren’t. I’d be working during that time on whatever ideas I had for new companies, defining the business opportunity, the business plan, the technology needed, etc.
I could explore these ideas as desired with the broader group of Foundation partners, their contacts, etc. Collectively, we’d figure out if any of these ideas really seemed worth doing. If so, Foundation would consider funding it. If they weren’t interested themselves, I was certainly free to see if someone else was interested.
I would also spend time with Foundation’s existing portfolio companies, which was theoretically good for everybody: one, to the extent I had some expertise of use to the company I could advise them on that; two, I could get additional exposure to running startups; and three, it’s possible that rather than starting a new thing, we’d find a mutually desirable match between myself and an existing portfolio company.
SM: Did you have a pretty good idea what you wanted to do with your new entrepreneurial endeavors? RV: I didn’t, so being an EIR was a great way of being exposed to a variety of new people and new ideas; established portfolio companies, new portfolio companies, new entrepreneurs just getting started, as well as people at other VC firms.
It certainly helped me learn how better to evaluate (and even generate) new ideas, and how to think about them in ways that I didn’t at the time. If you have a really clear idea what you want to do, and how to go about it, this might just be a distraction, taking time away that you could better put to use focusing on your idea.
SM: When you are looking to start a business, do you want venture funding? RV: Today there is any number of ideas which can be bootstrapped with a relatively small amount of actual capital. Even if you’re not currently sitting on a pile of cash from your last startup, you may be able to self-fund, at least for a while, with some combination of yourself, your co-founders, and angel investors.