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- The startup founders are not all right.
- They’re experiencing “unprecedented levels of stress” as a funding shortfall threatens to pull startups under.
A funding logjam at the early stages. A shut window for IPOs. Clients ghosting businesses. If the investor warnings are to be believed, struggling startups will face a bloodbath this year as cash runs low and wary investors encourage founders to return the capital.
Now, investors are predicting an epidemic of founder mental illness in Silicon Valley and beyond, the likes of which tech has never seen.
“Sadly, but not terribly surprisingly, it feels as though we are in the early stages of an unprecedented founder mental health crisis,” said Brad Svrluga, a cofounder and general partner at Primary, which invests in early-stage startups based largely in New York City.
The emotional burden entrepreneurs take on is well-known across startup land: the loneliness and self-doubt, the sleepless nights and the cold sweats. But being a founder in a tech downturn is a more challenging game, says Svrluga, who began venture investing during the dot-com bubble in 2000.
“It has made that lonely job even lonelier,” he said.
Founders are trying to save face for employees and investors while knotted up with the anxiety of a shortage of funding for startups. Companies like Convoy and Zume have folded in the bust. Layoffs are rampant. And in an otherwise turbulent year, founders are also reeling from two years of tough economic conditions, four years of largely remote work, wars, and a presidential election cycle.
Svrluga shared that he’s had multiple conversations with founders who divulged to him that they’d had anxiety attacks.
“We are seeing founders — who under the best of times walk that delicate line between the possible and the impossible — experiencing unprecedented levels of stress,” Svrluga said. “As capital markets likely fail to improve in 2024, I fear these pressures will only multiply.”
Jennifer Wolf, managing partner at Initialized Capital, echoed those fears. “Runways for many startups will run out, companies will wind down, and even with new opportunities that arise, founders will have many points of stress as they go through changes. It’s easy to get overwhelmed, which can lead to negative behaviors like ignoring problems and pretending they will go away,” she said.
Which begs the question: Will more investors rise to the occasion in support of founders or look away?
‘It’s like don’t ask, don’t tell’
The experience of being a haggard founder is widely shared, and still many suffer in silence. Founders worry that talking openly about their mental health could shred their credibility with their team or board. Investors might see their mental health struggles as a weakness and seek to replace them. So some founders hide behind a steely, hard-driving exterior. Many tell their secret only to other founders or their spouses.
Josh Felser, an outspoken early-stage investor and activist, previously told Business Insider, “The majority of VCs don’t want to hear about a founder’s mental health. It’s like don’t ask, don’t tell.”
The good news is that speaking about mental health and working through ways to address it isn’t as taboo as it once was. And investors are offering ways to help.
More investors have spun up programs to address founder mental health and burnout in recent years. Felicis Ventures and Seven Seven Six commit 1% on top of every new investment for founders to subsidize services like coaching and therapy. The Grand, a startup that provides group coaching as a service, told Business Insider one of the fast-growing segments of the business is coaching for founders, now that venture firms such as First Round, Redpoint, Forerunner, and Freestyle offer it as a perk to entrepreneurs.
For Primary, it’s an opportunity to dog food one of its investments. In 2018, it backed Alma, a company that helps therapy-seekers find in-network care and offers therapists tools to manage their practice and payer relationships. Now, Rebecca Price, a Primary partner who leads on all people and culture matters, is working with the Alma team on a series of intimate sessions with portfolio founders, facilitated skilled clinicians, to dig into the topic of burnout.
“We want to normalize the concept,” Svrluga said.
Wolf from Initialized predicts a rise in mental health benefits for founders “as more prepare for hardships and changes ahead.” Her firm has regular office hours with the founders in their portfolio, giving them a chance to talk through any of their business or life stressors and ensuring they take care of themselves. Initialized has also recommended Torch, one of its portfolio companies that provides executive coaching, to some of its founders.
“We coach founders to build resilience for hard times and address problems head-on,” she said, “but in order to do that, founders need to take care of their mental health and build in the support they need.”