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December 13, 2023
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Investing in Startups? Consider the Founder’s Mental Health!

– Venture Capitalists (VCs) are increasingly recognizing the importance of founder’s mental health in their investment decisions.
– The culture of sacrificing personal health, family, and finances for startup success is prevalent but flawed.
– A balance must be struck to promote “human sustainability” in entrepreneurship.

The startup and venture capital industries, originally a tiny nook of enthusiasts, has grown into a large, formalised and powerful sector of the economy. In the United States itself, Venture Capital-backed firms comprise a massive share of the financial industry. Globally, about 8% of the populace has devoted their lives to entrepreneurship, with an indication that this percentage will only keep rising.

The popular notion of entrepreneurship comes with the idea of sacrificing everything, including personal health, family life and finances for the sake of the startup. This culture is seen as the “right” way of being an entrepreneur. Commenting on this, Reid Hoffman, the billionaire founder of LinkedIn and Venture Capital fund Greylock Partners stated that “if I ever hear of a founder talking about how they have a balanced lifestyle, they’re not committed to winning.”

This culture is normalised by the stories of significant figures who worked relentlessly and risked everything to build their billion-dollar companies. They are often equated to superhumans with remarkable discipline akin to elite athletes.

However, such a culture of self-sacrifice for venture success might not be sustainable in the long term for entrepreneurs. VCs, recognising this, seem to increasingly factor the mental well-being of founders into their investment decisions.

Therefore, it comes to light that “human sustainability” in entrepreneurship needs to be promoted. Entrepreneurs need to find the right balance to maintain their mental health while pushing towards their startup success.

Indeed, this new consideration brings about a shift away from the previous notion of “all-in” towards a healthier and balanced approach to startup success strategy. Thus, the mental health of founders is gaining deserved prominence in the near future.

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