Founder Mental Health Impact on Startup Success: A Critical Perspective for Investors
The Hidden Toll of Entrepreneurship
Let’s imagine for a second that you are living in a world with tremendous stress and pressure from a never-ending journey. For many startup founders, one direction leads to success and another leads to all the pressures that come from failure. While beginning a business is highly romanticized in today’s society, the truth is the extensive mental health issues that accompany the entrepreneur experience are real problems that impact the potential success of the startup. As investors, it is imperative to understand mental health and its implications on the business. After all, it is one thing to be compassionate, it's another entirely to be strategic.
The Pain Points: A Closer Look
Startup founders experience unique pressures that can negatively affect their mental health. A few of these important pain points include:
Financial Stress – Many founders sink their life savings into their startups, often foregoing a steady income or salary and taking on debt, which can become debilitating.
Decision Fatigue – Founders are often tasked with making high-stakes decisions on a daily basis, hiring key personnel, raising investment funds, or dealing with the loss of a customer, often without any clear instructions.
Loneliness & Isolation - The founder’s journey can be lonely, particularly when certain decisions need to be made without a supporting cast.
Fear of Failure - The startup world worships success stories, but for each success story is usually 20 failures. It is an exhausting place, characterized with sleepless nights and self-doubt.
Work-Life Balance - Many founders are working 80+ hour weeks while sacrificing personal relationships, physical health, and self-care.
The Ripple Effect on Startup Success
The mental well-being of a startup founder does not just affect their individual well-being, the mental health of a startup founder has important implications for the success of a startup business. Here are a few examples:
Founder Burnout: Burnout can inhibit overall performance of a startup. Stress and burnout can easily lead to bad decisions ultimately negatively affecting the success of the startup.
Quality of Decision-Making: Stress and burnout can also reduce cognitive outcomes (i.e. memory, reasoning, analysis), resulting in impulsive high risk decisions.
Team Morale: A stressed and burned out founder can create a toxic environment where team morale, creativity, and innovation quickly erode.
The Data Speaks
Research supports the severity of the problem. According to physician and entrepreneur Dr. Michael Freeman, 72% of entrepreneurs have mental health issues, and of those: 49% suffer from at least one mental health condition (ADHD, depression, substance use disorder, etc.) Another report, Startup Snapshot, claims that 72% of startup founders reported a negative effect on their mental health.
How Evolve Venture Capital Can Help
At Evolve Venture Capital, we recognize the importance of founder mental health and its correlation with startup success. Here is how we can help:
Mental Health Assessment: We incorporate mental health assessment as part of our due diligence. It is important for us to find founders that need help as early as possible.
Access to Resources: We provide founders with access to mental health resources, such as psychiatrists and programs that help with stress management.
Educational Programs: We provide founders with education related to mental health, stress management, and self-care. Encouraging healthy coping mechanisms can decrease the possibility of burnout.
Supportive Culture: We have a supportive culture in our community. We think it is important for founders to share their challenges, so by encouraging their sharing we can decrease the stigma associated with mental health.
Conclusion
Investing in the mental health of founders is not simply a good deed, it is a good investment too. By strengthening founder performance, managing risk, retaining talent, and gaining a competitive advantage for the fund, VC firms can reap huge returns on their investment. At Evolve Venture Capital, we believe in advancing the startup ecosystem by making health and well-being foundational to movement. Not only is supporting founders and valuing their health and well-being the right thing to do, we think it is the smart thing to do. Join us in building such a startup ecosystem where founder health and well-being matter.
