Mental health has rarely been discussed in the venture capital community but the issue has garnered more attention recently, particularly among startup founders finding themselves under increased pressure in the current downturn.
The pressures of raising funds, meeting performance targets and coping with a stressful work-life balance are taking their toll on many entrepreneurs' mental well-being. According to a survey by data-sharing platform Startup Snapshot, some 72% of founders reported that launching their own business had a negative impact on their mental health.
As a result, more venture capitalists are putting resources towards supporting founders' mental health. But many in the industry believe more needs to be done.
"[Mental health concerns] are prevalent everywhere you look [in the startup community],” said Lisa Mikkelsen, head of global human capital at Flourish Ventures. "Being a founder, there are a lot of unknowns and it's like being in a huge pressure cooker. You have funders and employees that you're responsible to.”
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Despite mental health pressures impacting a large majority of founders, few dare to be open about their stress or anxiety—less than 20%, according to the Startup Snapshot survey.
And when they do share, it's rarely with their investors. Only 10% of founders feel comfortable talking about their stress with investors, fearing that showing signs of vulnerability could endanger their chances of securing funding.
"If a founder or CEO doesn't take care of their well-being, then many times it can lead to burnout,” said Suranga Chandratillake, a general partner at London-based Balderton Capital. "Fast-growing startups tend to be on the edge already given their nature, so if something goes wrong then it can really damage not just the company but also [investor] returns.”
Neglecting mental health can lead to bad decision-making or hinder an entrepreneur's ability to think creatively and solve problems, Chandratillake said. Burnout is one of the top reasons that startups fail, so tackling stress and anxiety among founders should be viewed as a component of good portfolio management.
Prioritizing mental well-being can also draw founders to VC firms, said Janos Barberis, co-founder of SuperCharger Ventures and Founders Taboo—an advocacy group for improving founder mental health.
"[Mental health support] is a big differentiator when it comes to deal flow, especially in terms of quality,” Barberis said. "I think founders who are more aware of their limitations are better founders and if you're saying that you can give support, you'll attract them.”
Being open about mental health as a VC can be an edge, particularly for founders struggling with mental health conditions. A study by Dr. Michael Freeman, a clinical professor of psychiatry at UC San Francisco, found that entrepreneurs were 10 times more likely to suffer from bipolar disorder and three times more likely to have ADHD than the general population. For founders with such conditions, knowing that a VC firm places importance on supporting their well-being could tip the scales in that VC's favor.