Startup Founder Mental Health Will Crumble in 2024, VCs Predict

• Startup founders are not okay.
• They are experiencing “unprecedented levels of stress” as a lack of funding threatens to push startups to the brink.
• While the experiences of panicked founders are widely shared, many still suffer in silence.

Financing impasse at the initial stage. Closed window for IPO. Clients ghost your business. If investor warnings are to be believed, struggling startups will face disaster this year as cash runs out and cautious investors urge founders to return capital.

Investors are now predicting an epidemic of founder mental illness in Silicon Valley and elsewhere, something the tech industry has never seen before.

“Sadly, but not surprisingly, it feels like we are in the early stages of an unprecedented founder mental health crisis,” said Brad Svruga, co-founder and general partner at Primary. said. York City.

The mental toll entrepreneurs take on is well known in the startup world: loneliness, self-doubt, sleepless nights and cold sweats. But being a founder in a technology recession is a tougher game, said Svruga, who started investing in ventures during the dot-com bubble in 2000.

“It made that lonely job even more lonely,” he says.

While founders are trying to save face for employees and investors, they also worry about a lack of funding for their startups. Companies like Convoy and Zume went bankrupt. Layoffs are rampant. And in an otherwise tumultuous year, founders are also reeling from two years of tough economic conditions, four years of largely remote work, war, and a presidential election cycle.

Svruga said he has had numerous conversations with founders who have revealed that they are having anxiety attacks.

“We are seeing founders walking a fine line between what is possible and impossible under the best of circumstances, but experiencing unprecedented levels of stress.” said Svruga. “With capital markets unlikely to improve in 2024, we are concerned that these pressures will increase further.”

Jennifer Wolf, managing partner at Initialized Capital, echoed those concerns. “For many startups, runway runs out, companies downsize, and even as new opportunities arise, founders end up feeling a lot of stress as they go through change. It's easy to get overwhelmed and ignore problems. “It can lead to negative behavior such as 'and pretending they're leaving,'” she said.

The question then becomes: Will more investors rise to the occasion in support of founders, or will they look the other way?

“Don’t ask, don’t say,” kind of thing.

The experience of being a haggard founder is widely shared, but many still suffer in silence. Founders worry that speaking openly about their mental health could erode trust with their teams and boards. Investors may see their mental health issues as a weakness and try to compensate for them. That's why some founders hide behind steely, hard-driving exteriors. Many people only tell their secrets to other founders or their spouses.

“Most VCs don't want to ask about founders' mental health. It's like, don't ask, don't tell,” outspoken early-stage investor and activist Josh Felser previously told Business Insider.

The good news is that talking about mental health and working on ways to deal with it isn't as taboo as it once was. And investors are offering ways to help.

In recent years, an increasing number of investors have launched programs to address mental health and burnout among founders. Felicis Ventures Seven Seven Six also commits 1% of each new founder investment to subsidize services such as coaching and therapy. The Grand, a startup that offers group coaching as a service, told Business Insider that one of its fastest growing areas is coaching for founders, and that it now has startups like First Round, Redpoint, Forerunner, and Freestyle. He said he is offering it as a service. Benefits for entrepreneurs.

For Primary, this is an opportunity to offer dog food as an investment. In 2018, we backed Alma, a company that helps therapy seekers find care in-network and gives therapists tools to manage their treatments and relationships with payers. Rebecca Price, the current primary partner leading all people and culture issues, is working with the Alma team on a series of intimate sessions with portfolio founders, facilitated by seasoned clinicians. It explores the topic of burnout.

“We want to standardize this concept,” Svruga said.

Initialized's Wolf predicts increased mental health benefits for founders “as they prepare for the challenges and changes ahead.” Her company holds regular office hours with the founders in its portfolio, giving them an opportunity to discuss business and life stressors so they can take care of themselves. Initialized also recommended one of her portfolio companies, Torch, which provides executive coaching to some founders.

“We coach founders to be more resilient to difficult times and tackle problems head-on. There is a need,” she said.