By: Christopher Calnan
Roland Beaulieu took six months off after his position as chief operating officer of Corporate Communications Broadcast Network ended when the company was acquired by Thomson Corp. in 2004.
He learned something important about being between jobs: He didn’t like being out of the loop.
So earlier this year, after finishing a two-year stint as CEO of NewRiver Inc., a financial-compliance company in Andover, Beaulieu had a plan — last month, he became an entrepreneur in residence at Newton Centre venture capital firm GrandBanks Capital
He’s one of a growing number of entrepreneurs in residence among VC firms. As technology becomes more specialized, VC firms are looking for better ways to set themselves apart from competitors. Industry observers say in-house entrepreneurs have become a symbiotic part of the VC world — venture capitalists help connect CEOs like Beaulieu with their next position while the CEO is available to advise the VC firm and its portfolio companies.
It also enables serial entrepreneurs to stay connected to the fast pace of technology. Losing touch with the deals being done in New England was the worst part of leaving the corner office, Beaulieu said.
“Sitting at a desk and going to meetings at GrandBanks helps me see the deal flow,” he said. “It gives me unique insight on both sides so it makes me a better CEO and manager for the next time.”
A top-notch CEO can help a VC firm attract the better deals because entrepreneurs are eager to work with all-star CEOs. Meanwhile, being in a VC firm offers a former CEO unprecedented access to entrepreneurs and their ideas, experts said.
The need for expertise is a major factor in the growing popularity of in-house entrepreneurs, said Mark Heesen, president of the National Venture Capital Association.
Firms are looking for ways to differentiate themselves from one another as they compete for fund-raising dollars. As technologies evolve it’s valuable for VCs to have specialists on staff, Heesen said.
“Everything is so much more complicated today,” Heesen said. “With the convergence of technology, you need that (many) more educated people in your firm.”
Cambridge-based Masthead Venture Partners doesn’t operate a formal entrepreneur-in-residence program, but it informally puts the concept into practice on a regular basis, general partner Brian Owen said.
The firm constantly networks with CEOs and seeks out technology executives in between positions to help the firm complete due diligence and offer advice to its portfolio companies. Such an informal EIR program is not for every firm, Owen said. “I think it’s a style thing,” he said.
A formal EIR position can make some executives feel beholden to the VC firm and restricted from taking deals elsewhere. That can be limiting, said Ken Zolot, senior lecturer in entrepreneurship at MIT’s Sloan School of Management. But it can also be a good way for a CEO to recharge depleted batteries while looking for the next management position.
Jim Acquaviva spent six months as an EIR for Chicago’s JK&B Capital before he became chief executive of Cambridge’s ClearPoint Metrics in 2004. The resident entrepreneur position became possible after his previous company — Burlington’s Kada Systems, a JK&B portfolio company — was acquired.
Acquaviva said the experience kept his entrepreneurial engine running hot while looking for the next opportunity.
“It’s a good way to immerse yourself in creative thinking,” he said. “I wanted something that was new and
fresh and not just a first follow-on of someone else’s idea.”
At GrandBanks Capital, prospective portfolio companies often have great ideas that need someone to put them into action, managing general partner Charley Lax said.
About 90 percent of the deals presented to the firm don’t include management teams, leaving it to the firm to find the managers, he said.
“When entrepreneurs come in, they’re full of inspiration,” Lax said, “but they don’t have a clue about execution. A lot don’t have the expertise to get to the next level.”
