Entrepreneur in Residence Questions and Answers
These questions and answers address key points about the Entrepreneur in Residence program. See the Entrepreneur in Residence program Web page for more information about the program and its goals.
- What is the concept behind the Entrepreneur in Residence Program?
- How does the EIR Program work?
- Where will the funding for this program come from?
- When do we anticipate the entrepreneurs from EIR2 to be in place and on site at the labs?
- What's the best-case outcome for this program?
- Why does DOE need an Entrepreneur in Residence Program? Won't the private sector take care of commercializing promising technologies?
- Why is EERE doing this? Isn't Science the lead on tech transfer?
- Is this called for in any legislation? Does DOE need authorization to do this?
- What is the selection process for the entrepreneurs?
- What is the selection process for the EIR partner venture capital firms?
- Does the EIR have an advantage over other entrepreneurs looking to start cleantech businesses?
- How long is an EIR in the laboratory?
- What relationships will DOE have with the spin-off companies?
- How were the host laboratories chosen to participate in EIR1 and EIR2?
- Other than the participating laboratories, what are the differences between EIR1 and EIR2?
- What is the status of the EIR1?
Q: What is the concept behind the Entrepreneur in Residence Program?
Through its national lab system, the federal government has historically focused on developing technologies to the point of publishing a white paper or a patent. The government, however, has not concentrated on taking these technologies and deploying them into the marketplace. The national labs excel at innovation and invention, but they have struggled with commercializing technologies and developing business plans.
The concept of the Entrepreneur in Residence (EIR) Program has long been used by venture capitalists, for example, in Silicon Valley. Through this system a national laboratory works with an entrepreneur with proven ability to first identify unique market opportunities and then create a business that capitalizes on those opportunities.
The first phase of the EIR Program (EIR1) began in 2007 and the second phase of the program (EIR2) began in 2008.
Q: How does the EIR Program work?
The government's expertise lies in identifying scientific aptitude, not entrepreneurial talent. So, DOE decided to partner with leading venture capital firms that are in the business of finding outstanding entrepreneurs. Following a DOE-issued solicitation, leading venture capital firms compete for an opportunity to win a "slot" at identified National Laboratories for one year of increased access to the researchers and the technologies at the lab.
For EIR2, DOE is providing $50,000 per firm to defray whatever costs the venture capital firm may incur in terms of logistics, salary, etc. These firms are then expected to match DOE's investment, as well as hire their entrepreneurs, compensate them, monitor their performance, mentor them and ensure their success. It should be noted that for EIR1 $100,000 per firm was provided by DOE for this purpose.
Q: Where will the funding for this program come from?
The $300,000 to run EIR1 and the $250,000 to run the EIR2 came from the Office of Energy Efficiency and Renewable Energy.
Q: When do we anticipate the entrepreneurs from EIR2 to be in place and on site at the labs?
We anticipate the entrepreneurs to be on site in the summer of 2009. As soon as DOE finalizes the award with the venture capital firm, the firm is free to place its selected entrepreneur in the laboratory.
Q: What's the best-case outcome for this program?
The ideal outcome for the EIR Program would be that each entrepreneur would identify one or more technologies and spin out a new start-up company. Without this program, these technologies would have gone unrecognized and would remain on a laboratory shelf.
Q: Why does DOE need an Entrepreneur in Residence Program? Won't the private sector take care of commercializing promising technologies?
The private sector is the most efficient means for scaling and deploying advanced energy technologies. That is exactly why DOE has created the Entrepreneur in Residence Program. Rather than expecting the government to innovate technologies and produce business plans and create commercialization pathways, DOE is partnering with the private sector to move these innovations to market.
Q: Why is EERE doing this? Isn't Science the lead on tech transfer?
EERE's mission includes "public-private partnerships that… bring clean, reliable and affordable energy technologies into the marketplace." The EIR program is a natural outgrowth of EERE's mission. As a DOE applied technology shop, EERE focuses on developing and commercializing near-commercial technologies. To fulfill the mission, these technologies must penetrate the marketplace, and not remain in perpetual R&D. The EIR program complements the Office of Science's DOE-wide technology transfer efforts, but the nature of this program is strictly the commercialization of EERE technologies.
Q: Is this called for in any legislation? Does DOE need authorization to do this?
DOE has a responsibility to the taxpayers to ensure money spent on R&D has the best possible chance of getting a return on our investment. In the case of taxpayer money invested in R&D in our national labs, we're looking to unlock the value of 30 years of energy R&D investments to increase our national security and overall economic vitality.
Q: What is the selection process for the entrepreneurs?
A chosen venture capital firm is responsible for selecting its entrepreneur. The venture capital firm's mission will guide the firm in selecting who it believes is the best entrepreneur for the position. Once an entrepreneur identifies a technology and spins out a business, the venture capital firm will then fill the rest of its year-long "slot" with another outstanding entrepreneur.
Q: What is the selection process for the EIR partner venture capital firms?
The EIR partner venture capital firms are selected in a competitive solicitation using the following predefined decision criteria:
- Energy efficiency and renewable energy experience
- Venture capital track record
- Entrepreneur in Residence experience
- Program proposal
A merit review committee composed of various experts then evaluates the proposals and makes a recommendation to the selection official.
Q: Does the EIR have an advantage over other entrepreneurs looking to start cleantech businesses?
No, the EIR Program does not preclude other entrepreneurs from working directly with the labs to license technologies and develop business opportunities. In addition, the partner venture capital firms were competitively selected using predefined criteria, which provides equal access to all solicitation applicants.
Q: How long is an EIR in the laboratory?
The EIR will be with the laboratory for as long as it takes to find a technology around which he or she could start a business or until the contract with the sponsoring venture capital firm expires, which is one year from their contract start date. DOE's hope is that the EIR will be able to identify a promising technology within only a few months, enabling the venture capital firms to bring in additional entrepreneurs.
Q: What relationships will DOE have with the spin-off companies?
DOE itself will not have a formal relationship with the spinoff companies. The national laboratory that holds the patent for the intellectual property that forms the basis of the start-up company will own a portion of the company's equity or receive royalty payments in exchange for issuing a license. The national laboratory will have all the rights and privileges as the company's other owners.
Q: How were the host laboratories chosen to participate in EIR1 and EIR2?
During the first round of the solicitation (EIR1), DOE selected labs from each of the DOE Offices: the Office of Energy Efficiency and Renewable Energy (National Renewable Energy Laboratory), Office of Science (Oak Ridge National Laboratory), and the National Nuclear Security Administration (Sandia National Laboratory). From there DOE selected the lab from each Office where EERE had made the largest investment.
Pacific Northwest National Laboratory, Lawrence Berkeley National Laboratory, Argonne National Laboratory and Brookhaven National Laboratory were chosen to host the EIR2 Program because of their EERE focus.
Q: Other than the participating laboratories, what are the differences between EIR1 and EIR2?
DOE funding for the program was reduced from $100,000 per EIR in EIR1 to $50,000 per EIR for EIR2. Venture capital firms are allowed to bid as consortia in EIR2. They were not allowed to do so for EIR1. For EIR2, EIR candidates will be limited to U.S. citizens and resident aliens only. In EIR1, foreign national candidates were accepted.
Q: What is the status of the EIR1?
On February 27, 2008, as a result of an initial competitive solicitation, three venture capital firms were chosen to work with the laboratories involved in the EIR pilot program. At Sandia National Laboratory, ARCH Venture Partners selected Mr. Tom Brennan as their EIR and he began his service at in March 2008. At Oak Ridge National Laboratory, Foundation Capital selected Mr. Michael Bauer as their EIR and he began his service in April 2008. At the National Renewable Energy Laboratory, Kleiner Perkins Caufield & Byers selected Mr. Joel Serface as their EIR and he began his service in May 2008.