C-Suite Health: Technical Assistance Solutions

Venture has been hot and “failing fast” is a mantra now more than ever for every new startup ecosystem. You likely already know the facts. Of these, in 2018, $99.5B dollars was invested into startups (CBInsights, 2018). Meanwhile, a Business Valuation Review found 77.6% of all startups are likely to dissolve without a successful exit (Business Value Review, 2010). These things we know in a roundabout way without the sourcing. However, what you may have missed was a recent article which dug a bit deeper into the make-up of this 77.6% figure. Here, loss of focus, burnout, disharmony among the team and their investors, lack of passion, and simply not having the right players accounted for primary reasons for failure 22% of the time (CBInsights, 2018).

If you have ever worked with startups, this should come as no surprise. But, how often does the investor community quantify their losses from these emotional health factors? Using just these base calculations, you can easily project a back-of-the-napkin emotional health loss of roughly $17B in the US 2018 venture market alone. $17B: it’s the sort of figure which can just find itself rattling around in your head for days. And, it seems folks are taking notice. It’s once a week yet another new article is circulating highlighting the emotional and mental health gap in entrepreneurship. Forbes recently remarked on the inability of young entrepreneurs to communicate their weaknesses. Instead, many are out to crusade everything as under control while preventing themselves from being honest to themselves, their teams, their boards, and the market in general (Bruneau, 2018). Think Aaron Schwartz, Ben Huh, Kate Spade, or Elon Musk for that matter. Truth is, you do not have to look far and wide to identify some thrilling innovations where eyebrows are furrowed at the top.

In “Are Entrepreneurs ‘Touched With Fire’?”, Michael Freeman explores the differences in mental health issues with entrepreneurs. By comparing this profession with the regular 9-5 routiners, his research found much higher rates of mental illness associated with entrepreneurship. In fact, as a test group, founders are more likely to endure uncertainty, social isolation, identity crises, shame, and lack of mental health support which continue to unfoil due to financial barriers. Here, imposter syndrome can run rampant as early-stage entrepreneurs attempt the impossible - hiding their failures while anxiously awaiting for the truth to surface. It’s also likely these innovators suffer more greatly from depression, bipolarity, ADHD, and substance abuse than the greater population (Freeman, 2015).

In fact, other studies have found even more evidence of founders’ behavior leading teams to fail fast and not necessarily in a way the mantra was intended. According to a study conducted by Noam Wasserman, 65% of startups fail due to avoidable conflicts specifically among co-founders.5 These issues catalyze a lack of team harmony, loss of focus and passion, general burnout, and questions raised concerning whether or not the team members themselves are the right ones.

Now, we’re back to that 22% figure. We’re back to the missing year-over-year projection of $17B. And, despite the market wanting it’s capital losses mitigated and entrepreneurs needing healthier and happier livelihoods to succeed, options are simply not being promoted. Entrepreneurs need support and awareness about their occupation’s side effects. Taking the constant barrage of these findings into consideration, TechCrunch recently published an article stating “investors need to show founders it’s OK to open up and that it’s OK to have doubts or to struggle with mental health" (Chapman, 2018).

So how are investors exactly “showing” this to founders? And, how are founders asking for this from their investors? For funds which have technical assistance facilities allocated for their portfolios, why are mental health services, or, at the very least, executive development services not being advertised or even required? Especially for first time entrepreneurs, couldn’t the use of an external and independent provider of 360 assessments, qualitative leadership performance dashboard monitoring, leadership succession planning, and perceptual and/or behavioral team coaching help mitigate many of these market losses? After all, what is mental health actually worth to their investors? $17B? Solving for it costs much less.

Innovative entrepreneurs are starting new businesses just about everywhere. They create the vast majority of new jobs, pull economies out of recessions, introduce useful products and services, and ultimately forge the greater prosperity among nations. Kumbaya. But at what price? Mental Health. Funds with Technical Assistance facilities are primed at the forefront to resolve these issues outside of the boardroom.

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References

Bruneau, Megan. “7 Reasons Entrepreneurs Are Particularly Vulnerable to Mental Health Challenges.” Forbes, Forbes Magazine, 9 Apr. 2018,

www.forbes.com/sites/meganbruneau/2018/04/04/8-reasons-entrepreneurs-are

particularly-vulnerable-to-mental-health-challenges/#57db02d463a3.

Chapman, Jake. “Investors and Entrepreneurs Need to Address the Mental Health Crisis in

Startups.” TechCrunch, TechCrunch, 30 Dec. 2018,

techcrunch.com/2018/12/30/investors-and-entrepreneurs-need-to-address-the-mental-

health-crisis-in-startup-culture/.

"Does Black Scholes Overvalue Early Stage Company Allocation?" Business Value Review. Vol. 16 No. 1, January 2010.

Freeman, Michael A, et al. “Are Entrepreneurs ‘Touched with Fire’?” Michaelafreemanmd, Freeman, 17 Apr. 2015,

www.michaelafreemanmd.com/Research_files/Are%20Entrepreneurs%20Touched%20wit

h%0Fire%20(pre-pub%20n)%204-17-15.pdf.

“The Top 20 Reasons Startups Fail.” CB Insights Research, 24 Apr. 2018,

www.cbinsights.com/research/startup-failure-reasons-top/.

“Venture Capital Funding Trends Report Q4 2018.” CB Insights Research, Venture Capital, 2018, www.cbinsights.com/research/report/venture-capital-q4-2018/.