It’s no secret that founding a company is stressful. Faced with the pressure of having to constantly sell your vision to stakeholders, and the fact that the majority of startups fail, it’s not surprising to hear that entrepreneurs are 50% more likely to experience mental health issues.
I’ve worked in venture capital for more than 10 years, but before I joined the industry, I founded a tech startup in my mid twenties. When I eventually found myself forced to wind the company down and return the capital I’d raised to my investors, I was confronted with my first real experience of failure and literally felt like I’d hit a wall.
Today I’m incredibly grateful for the insight and empathy that this early experience of founding a company allows me to bring to my work as a VC. The reality is that no one starts a company because they think it’s going to be an easy ride, or that they’ll be able to enjoy a good work-life balance.
People found companies because they’re passionate about solving a problem. Even though this can be hugely rewarding, the downside is that if your startup fails and your vision is taken away from you (which unfortunately happens all too often), it’s extremely difficult not to take it personally.
For founders, the highs are high and the lows are low. The entire journey from inception has a direct impact on founder mental health, with a 2019 study finding that almost 70% of founders had experienced sleep problems and/or depression while running their business.
Clearly there’s a real opportunity for VCs to offer support and help build founders’ resilience, and ultimately make sure the startup is best placed to succeed.
Mental wellbeing as performance management
As VCs it’s crucial that we start taking more responsibility for the founders whose startups we invest in. The founder is the single most important component of any startup, particularly at the early-stages.
And although we’re used to putting all sorts of functional expertise in front of founders to help with product, marketing and finance, we rarely give much thought to how we can help them thrive on a personal level and to ensure they’re able to perform at their best – and support them at their lowest points.
By overlooking founders’ personal wellbeing, VCs are missing a trick. Of the numerous factors that determine a startup’s chances of success, the founder’s individual performance is not only the most significant, but it is also something that can be improved with the right support.
If we view the founder’s wellbeing and mental health in terms of performance management, we can play a key role in helping them become the best possible leader and CEO during the early stages of a company’s life.
Most importantly, we shouldn’t be waiting until founders reach burnout before we address the issue of how to support better mental wellbeing. Although in an ideal world we’d all learn about the value of investing in our own mental health from a young age, there are clear steps that investors can take to help founders develop the mental resilience required to weather the highs and lows of building a company from the ground up.
Building a broad support network
One crucial means of maximizing founders’ personal performance is to equip them with the resources to build a broad support network. Ideally this should involve a combination of the following: peer support, mentorship, and professional coaching.
A peer support network might take the form of anything ranging from regular get-togethers with other founders, or more formal groups specifically designed to discuss the challenges of running a startup. Given 82% of solo founders experience loneliness, these connections can be really helpful in reducing isolation.
Mentoring and coaching on the other hand are more directly concerned with providing founders with guidance when it comes to solving the day-to-day problems of running a business. While a mentor might be someone 10 years older, who has experience of building their own company and can offer practical advice, a professional coach is there to help founders solve problems for themselves and provide accountability.
In my experience, the most valuable thing about having a coach is that, unlike a co-founder, adviser, spouse, investor, or employee, a coach doesn’t have a vested equity interest in the success of the company and isn’t typically familiar with the founders’ specific industry.
Instead the coach is paid to be there for the founder as an individual. They help untangle problems, identify areas where the founder isn’t at their best, and develop the resilience and stamina to deliver on a vision amid the turbulence of running a startup.
A more honest founder-VC relationship
If you ask the founder of one of your portfolio companies how things are going, they’re unlikely to be forthcoming with you about any personal struggles. It takes a lot of time and energy to build the trust where both parties can be transparent with one another. If this can be achieved it leads to better communication and long term decision making for a startup.
Fear and greed are commonplace in the startup world and yet the most powerful thing a VC can do is park their ego at the door and focus all their energy on helping to make the best decisions for a startup.
As a founder once said to me, investors are used to having a lot of ownership but not a lot of accountability when it comes to the startups and individuals they invest in. However, by taking an active role in managing founders’ personal health and performance, and seeing resilience as something that needs to be consciously developed, a startup stands a far greater chance of success.