What Is an Entrepreneur in Residence?

An entrepreneur in residence is someone who mentors those starting new companies, or startups. The mentor brings expert entrepreneurial hands-on experience to the startup endeavor. An entrepreneur in residence moves into the business temporarily, helping to manage the launch of the enterprise and works to maximize the company's chances for success.

The mentor often fills the role of chief executive officer (CEO), applying business acumen to launching the new business. A business incubator may also work with the entrepreneur in residence to help the new enterprise become established. He or she often assists in lining up investment capital, so that the fledgling firm may grow. Business incubators may receive support from local governments in the form of subsidized office space, tax credits and other means of encouraging the development of new businesses.

Often the companies that use incubators are developing technological solutions for the marketplace. It is typical for the inventor of the solution to have a skill set more suited for developing solutions than for managing a company. Those who invent new products and better ways of doing things do not necessarily possess the management skills needed to shelter a startup through to profitability.

An entrepreneur in residence typically has years of experience in successfully launching companies. Assistance the entrepreneur may offer might include lining up capital, analyzing and streamlining business operations, and recruiting the human resources needed to launch the enterprise. Business incubators may receive support from local governments. This may be in the form of subsidized office space and tax credits.

Funding for new companies may be provided through angel investors, too. An angel investor funds startups that have a significant risk of failure, figuring that one big success story outweighs multiple failures. An investor may also take on the role of entrepreneur in residence. It is frequently a challenge for an entrepreneur to obtain sufficient capital for launching the business.

In the area of new technology development, it may take many years before the business turns a profit. This is particularly so if the business concept involves a lengthy product development time line. One task of the entrepreneur in residence may be to help the company initiate long-term relationships with investors. This ensures the continuing growth of the new business. Some believe it is better to have a mentor who had no previous relationship to the entrepreneur.

It is often difficult for people in close relationships to have the objectivity needed to make tough business decisions. For example, if two close friends are developing a new concept, one may have a special affinity for the idea, because he or she thought of it first. The other partner may have more objectivity. As a result, that partner will have the vision to see that the product launch may fail. An entrepreneur in residence can provide the objectivity to steer the partners through a potential impasse that could derail a new business and maximize the potential to succeed.