Is Founder Wellbeing Directly Proportional to Start-Up Success? The role of the start-up ecosystem in making the global economy thrive is well-established. The Indian start-up community, too, has been a key player with an impressive list of 100+ global unicorns.
By Harsh Gupta
Opinions expressed by Entrepreneur contributors are their own.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
The role of the start-up ecosystem in making the global economy thrive is well-established. The Indian start-up community, too, has been a key player with an impressive list of 100+ global unicorns. Five start-ups have already made it to the global unicorn list as of August 2024 (the number was 2 in 2023). The country also continues to be a global leader in fintech with as many as 26 unicorns with a combined market value of $90 billion.
The global funding winter is thawing, albeit slowly. The Indian Union Budget 2024 brought more good news for the ecosystem with the abolition of the infamous 'angel tax.' It seems that prospects for start-ups are looking up, but are they?
It's Lonely Up There
According to a 2024 study, in the backdrop of falling valuations; tightening of VC purse strings and stringent scrutiny of start-up bottom lines, 61% start-up founders admitted to considering leaving their companies. A startling 61% of start-up founders reported considering stepping away from their companies. Of those, 49% plan to do so within the next year. The reasons for this are complex but clear: stress, anxiety, and burnout are widespread, with 39% of founders disclosing symptoms of depression.
Founders are finding it challenging to hold on due to economic challenges, including their company's current financial situation, as well as fundraising. Inhibiting beliefs such as pressure of other's expectations; feeling of loneliness in one's journey; and the feeling that they may be sacrificing their present lives for future success also contribute to stress.
It does not help that talking about mental wellness is still a taboo. As per a 2023 study, close to 55% founders were reluctant to seek help due to the stigma associated with doing so. Clearly, a focus on wellbeing must be a priority if the start-up ecosystem is to weather temporary storms to emerge stronger.
How can investors help?
Research by Flourish Ventures and Endeavor Brazil highlights a positive correlation between emotional intelligence (EQ) and high performance among startup founders. The data shows that founders who prioritize their mental health and wellbeing lead more innovative, engaged, and productive teams, resulting in better financial outcomes and sustainable growth.
Normalizing mental health support within the startup ecosystem benefits not just the founders, but also investors aiming for long-term success and profitability.
Here's how investors can make a difference:
Hold Space for Founders' Growth
Investors can foster environments where founders feel supported, both professionally and emotionally. Structured mentoring, encouragement to build emotional intelligence, and platforms for open dialogue without judgment are key. Organizing peer circles where founders can share their challenges and learn from one another also offers valuable support. Providing access to professional coaching and counselling services is another way investors can contribute to founder wellbeing.
Normalize Taking Breaks
Many startup founders find the concept of work-life balance elusive, often working around the clock. As investors, we can encourage founders to take healthy breaks, network with their peers, and step away for vacations to recharge. Promoting a culture in which stepping away is seen as vital to long-term success can have a profound impact on founder resilience and productivity.
Push for Conducive Environments
Despite the growing awareness of mental health challenges, many founders hesitate to speak openly about their struggles—especially to investors. There's a fear that admitting vulnerability could jeopardize future funding opportunities. Simply engaging founders in conversations about their wellbeing can go a long way. Given the power dynamics between investors and founders, it's crucial for investors to step up and help dismantle the stigma.
Ultimately, founders are the backbone of innovation, driving industries forward despite the immense personal and professional pressures they face. By supporting their mental health and wellbeing, investors can not only foster a healthier startup ecosystem, but also secure stronger returns in the process.
