Mind or the money? Founders need to be careful not to lose either
These days, there’s more money sloshing around in venture capital funds than ever before, ready to be ploughed into the next best business idea.
The reality of scaling a business in the UK can be exhilarating yet bleak at the same time. It’s a big dipper of optimism and pessimism – high-octane peaks of self-belief, followed by plummeting drops to the depths of self-doubt.
In the past, the runway to investment was much longer, and founders experienced these rollercoaster-like highs and lows before they even thought about taking on financial capital. As their self-belief fluctuated, along the way they built up emotional resilience that prepared them for the pressure of taking on massive amounts of equity, which can be extremely stressful.
From my own experience, there’s something positive about dealing with failure early on in your entrepreneurial journey when the stakes are lower. It prepares you mentally for the pressures to come.
Today, though, businesses secure investment much earlier, which often means 20-year-old whizz-kids can’t rely on mental resilience that is only built up over time.
They have to learn on the fly how to deal with very eager capital providers, while also running their own companies. It’s not for the faint-hearted.
In the past, investors would hand over buckets of cash to entrepreneurs with the message “don’t lose it”. I believe that investors should now be passing on the same message but with mental health in mind.
As well as checking how much product has sold, shouldn’t the investment industry also be asking how much sleep founders are getting? And if they’re really taking care of themselves?
It’s clear to me that human capital – the people behind and within companies – is just as important as the financial capital invested in them.
Emotional capital is equally important too. Not all capital is equal. Earlier this year, I launched the 100 Stories of Growth campaign to inspire founders to seek the right type of investment , from the right place, at the right time – and all the support that comes with that.
From our research, we know that more than half of founders described growing their business as one of the toughest experiences of their lives, with a quarter feeling that their mental and emotional health had been negatively impacted.
A key part of our campaign is the Don’t Lose It initiative, which places wellbeing and mental health at the heart of the capital debate. And we hope to encourage everyone in the SME investment community to have a much-needed and transparent discussion about the pressures of building a high-growth business.
The campaign hopes to encourage the investment community to commit to taking action long-term – to acknowledge that they can make a positive difference to founder wellbeing.
It’s true that ultimately founders are responsible for their own care, but investors can be the lynchpin to create this change. It’s high time VCs invest in founders’ wellbeing as carefully as they do in their businesses.