As VCs, we’re aware that the entrepreneurial path is rarely a smooth one, even the most successful founders will face challenges along the way and the pandemic has heightened many of these issues.
But rather than just focus on the potential issues and roadblocks, normalising the conversation around mental health and supporting founders through all stages of growing their companies.
The scale of the mental health crisis
Firstly, let’s face facts – becoming a founder and leading a start-up is not for the faint-hearted. It takes a huge amount of courage, perseverance, blood, sweat and tears. Recent research conducted by 3sixty on founder stress and performance found that 53 per cent believe building a business was one of the toughest times of their lives and 45 per cent were under constant and extreme pressure. The results are particularly stark when it comes to feelings of isolation – loneliness rates in the UK average 14 per cent, for founders, it's 5.5 times that at 79 per cent. Overall, 1 in 4 founders are suffering in silence with their mental health.
It’s likely all of these feelings will have been heightened in the current environment, particularly as founders will now have had almost a year of working from home, isolated from their teams and investors. There is nothing that quite beats face to face contact.
What is the root cause of these mental health issues?
One of the biggest challenges that founders face in building a start-up is the overwhelming feeling that they’re ‘always on’ – their business will often feel like an extension of themselves and that constant need to keep delivering is hard to shake off. The Dunning Kruger effect shows that when founders receive VC investment, their confidence can be at an all-time high but this can drop off as they realise how far they’ve still have to go. Often, while their experience grows, a founder’s confidence level often doesn’t recover at the same rate. As a VC we find that founders often need the highest levels of support at this time when self-doubt starts to creep in.
It’s also worth considering that an average VC investment is 7 years (from start-up to exit) and can often be longer. It’s not just a case of coming up with a brilliant idea – it takes years and years to build a business. All start-up companies will face a series of setbacks along the way and that can have a huge impact on a founder's overall well-being.
The Mindful VC – our role in providing mental health support
It is unambiguously in the VC’s interest to take the mental health of their founders seriously because failure to do so can be hugely detrimental to the growth of a business (and the well-being of the founder and their teams). It’s really important that we talk about it openly and set this precedent at the beginning of the relationship, don’t take “I’m fine” as an adequate response. It’s also worth nominating a board member to take on the responsibility of checking in with the founder (so they’re not constantly pestered but feel supported) and conducting some mental health training amongst your own investment team.
Within our own portfolio, we frequently have to deal with life events, both positive (marriage and kids) and negative (illness, bereavement, divorce, shock). We think of this as a form of crisis management. What contingencies need to be in place? How will we build support and organisational resilience? Having a written plan can make the difference. We need to be mindful that founders have a vision and running out of cash can wreck this dream which is a major cause of stress. As VCs, we plan follow-on funding decisions further in advance to help companies maintain a solid cash buffer.
We can also help to put things into perspective for founders, events are rarely as catastrophic as they initially feel and others have usually faced similar issues. By sharing challenges openly, issues can often be resolved quicker.
It is also worth encouraging founders to join peer to peer networks with like-minded individuals and support them in seeking a mentor or coach to provide additional guidance. But perhaps the most important thing to consider is encouraging them to take time for themselves. To gain some perspective, everyone needs to take a break and disconnect from their work lives. Whether it’s taking some exercise, spending time with friends and family, or simply getting enough sleep, this will all contribute to positive mental health.
We know from experience that supporting founders means we can help them sustain levels of peak performance to get the best out of them and their business. Now, more than ever the discussion around mental health needs to be open and transparent.
Co-founder of Oxford Capital Partners. Husband, father, adventurer and polar marathon runner. Represent Great Britain at master level in Modern Pentathlon.