“Unprecedented stress”: Founders suffer from mental crisis

Many founders are suffering: their stress levels are rising due to a lack of investor money. And although “panicked founders” are not an exception, many suffer on their own.

iStock; Rebeca Zisser/Insider

A funding backlog in the early stages. A closed window for IPOs. Customers ghosting the company. If investor warnings are to be believed, this year will see a bloodbath among startups as money runs out and suspicious investors demand that founders return their capital.

Now investors are also predicting an epidemic of mental illness among founders in Silicon Valley and beyond, the likes of which the tech industry has never seen before.

“Sadly, but not particularly surprising, we feel like we are in the early stages of an unprecedented crisis in founder mental health,” says Brad Svrluga, co-founder and general partner at Primary, a firm that invests in early-stage startups primarily in New York City.

The emotional toll entrepreneurs take on is well known in the startup scene: the loneliness and self-doubt, the sleepless nights and sweats. But being a founder in a tech downturn is even more challenging, says Svrluga, who started venture investing during the dot-com bubble in 2000. “It makes this lonely job even lonelier,” he says.

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Founders are trying to save face with employees and investors while also battling fears of a shortage of startup funding. Companies like Convoy and Zume have collapsed in the wake of the crisis. Layoffs are commonplace. And in an otherwise turbulent year, founders are also dealing with two years of difficult economic conditions, four years of largely remote work, and wars.

Svrluga says he has had several conversations with founders who told him they were having anxiety attacks. “We are seeing founders – who walk the fine line between the possible and the impossible at the best of times – face unprecedented levels of stress,” Svrluga says. “And with capital markets unlikely to improve in 2024, I fear that this pressure will only increase.”

Jennifer Wolf, managing partner at Initialized Capital, shares these fears: “The runways for many startups will expire, companies will dissolve, and even if new opportunities arise, founders will experience a lot of stress during the changes. It’s easy to become overwhelmed, which leads to negative behaviors, such as starting to ignore problems,” she says.

This raises the question: Will more investors seize the opportunity to support founders, or will they look the other way?

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“Don’t ask, don’t tell”

The experience of being a struggling founder is common, and yet many suffer in silence. Founders worry that being open about their mental health could damage their credibility with their team or board. Investors might see their mental health issues as a weakness and try to replace them. As a result, some founders hide behind a steely, stubborn facade. Many only reveal their secret to other founders or their spouses.

Josh Felser, an early-stage investor and activist, tells Business Insider, “Most VCs don’t want to know about a founder’s mental health. It’s like don’t ask, don’t tell.”

The good news is that talking about mental health and solutions to the crisis is no longer as taboo as it once was. And some investors are offering support.

In recent years, more and more investors have launched programs that address founder mental health and burnout. Felicis Ventures and Seven Seven Six give an additional one percent on every new investment to fund services such as coaching and therapy for founders. The Grand, a startup that offers group coaching as a service, told Business Insider US that one of the fastest-growing segments of the business is coaching for founders, after venture firms such as First Round, Redpoint, Forerunner and Freestyle started offering it as an additional service for entrepreneurs.

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In 2018, Primary backed Alma, a company that helps people seeking therapy find care and provides therapists with tools to manage their practice and relationships with payers. Now, Rebecca Price, a Primary partner responsible for people and culture, is working with the Alma team on a series of one-on-one sessions with portfolio founders, led by experienced clinicians, to discuss burnout.

“We want to normalize the concept,” says Svrluga.

Initialized’s Wolf predicts a rise in mental health services for founders “as more prepare for upcoming difficulties and changes.” Her firm offers regular office hours with the founders in its portfolio to give them the opportunity to talk about their business or personal stressors and make sure they’re taking care of themselves. Initialized also recommends Torch, a portfolio company that offers executive coaching, to some of the founders.

“We coach founders to prepare for difficult times and tackle problems head-on,” she says, “but to do that, founders need to take care of their mental health and demand the support they need.”

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