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Most Start-ups and the success stories we hear involve a Founder who pushes themselves to both physical and emotional limits.

Deliberately pushing yourself to burnout is usually celebrated and seen as a ‘good’ imbalance. This might technically make business sense, since start-up and VC ecosystems usually thrive on blood, sweat and tears of the Founders and initial teams, but it is very counter-intuitive when it comes to the human factor. The constant stream of stories about “overnight success” and “crushing it” create an unattainable standard for Founders.

According to a widely cited study by Michael Freeman (Prof of Psychiatry at Uni of Calif , Entrepreneurship Mentor & Serial Founder), entrepreneurs are 50% more likely to report having a mental health condition, with some specific conditions being incredibly prevalent amongst Founders.

Founders are twice more likely to suffer from depression, suicidal thoughts and have psychiatric hospitalization. They are 3 times more likely to suffer substance abuse, 6 times more likely to suffer from ADHD and 10 times more likely to suffer from bi-polar disorder. It only makes sense that these conditions undermine Founder performance and put their own (and company) success in jeopardy. This realisation together with the stigma of mental health amongst company Founders and leaders makes it that much harder for the entrepreneurs to get out of the loop of mental health erosion — they are seen as super-humans and speaking up about it feels like weakness, it feels shameful.

In some of the most extreme examples, tech entrepreneurs have lost their lives to suicide and substance abuse, but many more live with depression and other disorders in silence.

According to professor Noam Wasserman at Harvard Business School, 65% of failed start-ups fail for avoidable reasons like co-Founder conflict and other people problems. If at least a small fraction of these failures could be avoided simply by taking care of Founder mental health in the way investors and those around them can, wouldn’t it be a very small price to pay for the Founder’s personal, and in turn, business success?

After analysing his study data, Michael Freeman wrote: ‘Mental health is as essential for knowledge work in the 21st century as physical health was for physical labor in the past. Creativity, ingenuity, insight, brilliance, planning, analysis, and other executive functions are often the cognitive cornerstones of breakthrough value creation by entrepreneurs.’

Therefore, personal Founder wellbeing is intrinsically linked with the wellbeing of the company. Even if investors do not personally care about the mental health of the Founders, they should pay close attention to it if they care about portfolio returns.

One of the most prominent mental health challenges leaders in the start-up/VC ecosystem face is navigating the internal and external pressures and expectations. There’s a cycle in the startup world of chasing new rounds of investment, with the next raise seemingly always round the corner. Each round brings a new set of investors with a new set of pressures and urgency to hit the metrics. In this loop, it is difficult to pinpoint achievements and celebrate wins, as each of them brings on another challenge. The second most stressful time for Founders is right before they are able to secure a major fundraise; the most stressful time is right afterward.

There are ways that both start-ups and venture investors can deal with this issue and it starts with destigmatising. If Founders felt more comfortable talking about their mental health issues, a lot of severe problems could be avoided by solving people problems, before they become company problems and come at the cost of company success. Being (truly) Founder-centric should be at a core of start-up and early stage investing, as the evidence shows that Founder personal and business success are linked and can go hand in hand. Despite what the industry narratives often tell us.

At Kavedon Kapital, we are committed to understanding our Founders on a deeper level than the very superficial layer. Our Behavioural Scientists in residence are ready to help Founders understand their people and themselves, creating winning-teams and long term prosperity.

Article by

Analyst

Ieva Katiliute

Ieva has over 5 years international experience in Asset Management and Venture Capital.

Initially, as part of the founding team in a start-up in Hong Kong, Ieva was responsible for product management, fund raising and IP. During the last 4 years, Ieva has worked as an Investor Relations and Investment Operations Associate at an Asset Management firm in London and at Truesight Ventures, as an analyst focused on different pre-seed and seed stage companies, carrying out product and market analysis.