The startup ecosystem serves as a pivotal force in driving global economic growth and fostering innovation. While the triumphs and impacts of startups are widely celebrated, there is a noticeable gap in discussions about the mental fortitude required of founders experiencing the entrepreneurial journey. Recent research, such as the Startup Snapshot data, underscores the prevalence of negative impacts on founders' mental health, with burnout, anxiety, and depression being common challenges. This aligns with Sifted's latest research indicating that 85% of founders experienced stress in the past year and 75% of them had anxiety at the same time, and with findings from a Mental Health UK study indicating that 4 out of 5 small business owners experience symptoms of poor mental health.

Interestingly, the same research highlights a paradox – despite heightened stress and anxiety post-launch, the majority of entrepreneurs tend to enjoy the overall process and express a willingness to embark on it again. The key determinant in enjoying the journey is often the ability of strong founders to be mentally fit.

Mental fitness plays a pivotal role in maximizing productivity and unlocking potential. Similar to the relationship between physical health and fitness, mental fitness and wellbeing connotate a broader and more proactive view of mental health that ultimately optimizes an individual’s ability to think clearly and make decisions efficiently and effectively. With research from both Harvard Business Review and the University of Berkeley suggesting that there is an optimal level of stress at which performance is enhanced, maximizing one’s mental fitness is likely the key to finding the ideal balance between stress and performance.

Common drivers of stress for founders

Drawing on our experiences as a venture capital firm in the Middle East and Africa and insights from our diverse portfolio of 60+ companies, we have identified a number of shared challenges and stressors in startup founders – most of which can be mitigated through practices that strengthen mental fitness.

Conflicts with co-founders and C-Suite executives: Founders often choose their co-founders under the assumption that they will be their biggest source of support over the course of the venture’s lifetime. While this holds true in many cases, conflicts with those you trusted enough to share a significant portion of the business with are often extremely complicated. Clashes over the long-term strategy of the business can spill over into wider team dynamics and weaken team morale, while the exit of a co-founder can create cap table dynamics that significantly hamper future fundraising efforts.

“Overtime, the perceived value of co-founders could change, and it is important to identify and tackle this issue early on. My approach has been with the lens of "what's in the best interest of the business", rather than individual interest, and to try to keep that at the forefront of all conversations. It also helps through the emotional stress by reinforcing that belief to continue to pursue the opportunity.“ GV portfolio founder

Evolving market conditions and increased competition: Ever-changing landscapes, whether borne by macroeconomic shocks or changes in regulations, can quickly disintegrate even the most comprehensive and robust growth strategy. Recent global macroeconomic shocks, such as the COVID-19 pandemic or the Russo-Ukrainian conflict, often provide little to no prior warnings to entrepreneurs, most of whom are already operating lean models with minimal contingencies. Similarly, significant innovations in the global tech landscape that may eradicate one’s competitive advantages, such as the recent proliferation of AI solutions, can be equally unpredictable and daunting to overcome.

Dwindling cash runways: Having to balance short cash runways with the pressure of growing at the rate expected by investors can put immense pressure on founders. Short-term solutions to limited cash balances, most notably layoffs, further impact the mental health of entrepreneurs and create shocks to corporate culture and team morale. With access to capital becoming increasingly difficult in today’s fundraising environment, there are limited ‘get-out-of-jail-free cards’ for founders who mismanage their cash runway.

Additionally, short cash runways tend to increase the chances of conflicts with investors, who may begin to panic and become increasingly difficult as the likelihood of their investment being written down to $0 grows. Negative noise in the market, especially from a disgruntled investor, can create sizable distractions for founders, while also threatening to derail relationships with other existing investors.

“I’ve been doing this for almost a decade, and each time stress peaks when cash starts running low and there’s uncertainty about making it to the end of the month. The stress about not potentially being able to pay salaries is the one scenario that I have not been able to cope with, at least fully. I remember the first time it happened I was very close to a burnout. It definitely got better with time, but it is still a huge factor of distraction and an inefficient allocation of management attention.” - GV portfolio founder

Tips to mitigate these challenges and maximize founder mental fitness

Mitigating stress and maximizing one’s mental fitness often includes a wide range of healthy habits. Personal health habits, such as regular exercise, taking breaks, and having hobbies outside of work are critical factors in achieving strong mental fitness (detailed recommendations can be found from the Entrepreneur and the University of Michigan). Over the years, we have worked with many of our founders on implementing effective mitigation strategies to help them ultimately gain more control of their business and improve their long-term mental fitness. Below are some examples, in the hope that they can be useful to other founders within our ecosystem.

Be open and transparent (where possible): Managing the relationship with one’s co-founder can at times be seamless and effortless or challenging and draining. The same goes for relationships with investors. One of the most effective ways of ensuring a healthy relationship, in both situations, is openness and transparency. The lack of access to information often tests the trust between founders and their key stakeholders. In most cases that we’ve observed, problematic investors or co-founders often originate due to a feeling of being misled or misguided, which typically originates from irregular communication. On the flip side, founders who are able to be open about their challenges and actively seek support from their co-founders and investors are able to build trust with their key stakeholders to mitigate this risk.

Delegating effectively: While an early-stage startup culture often emphasizes the need to wear multiple hats and achieve results with minimal resources, the long-term health and success of a business does depend on the founder’s ability to surround themselves with people they can trust. Finding people that a founder can trust to share the burden with is critical for a founder’s long-term mental fitness, both in terms of managing stress and maximizing productivity. In most cases, this often enables the founder to focus more on external facing stakeholders and ultimately become more of a visionary for the business, helping to better predict and prepare for market shocks and changes.

Alternatively, effective delegation can also be achieved by instituting new corporate structures to increase efficiency and allow employees to become more accountable for certain aspects of the business. The EOS is one such system that we’ve observed to be quite impactful.

Choosing your investors wisely: It is important to remember that onboarding an investor into your business involves much more than the disbursements of funds. The right investor can be a key source of value to the business, unlocking key growth opportunities in both the short and long term. However, the wrong investor can be equally harmful, not only to the health of the business but to the mental health of the founder as well. Keeping this in mind, founders must ensure they are onboarding the right investors into their business. Additionally, we’ve seen first-hand how hiring a CFO can help, not only to manage cash flows and fundraising, but to help improve investor relations in instances where the relationship may be strained.

An important point to keep in mind is that founders lead by example, whether they like it or not. A founder that doesn’t optimize their mental fitness risks their team doing the same, often resulting in unhealthy work environments that create another set of challenges. Alternatively, founders that prioritize their mental fitness can have significant network effects across the business, with healthy practices often inspiring their team to follow suit.

Ultimately, the paradoxical nature of entrepreneurship, where stress coexists with a passion for the journey, underscores the importance of cultivating strong mental fitness. While challenges such as short cash runways and conflicts with key stakeholders pose common challenges, founders can enhance their mental fitness by embracing practices such as effective delegation and fostering open and transparent communication. These strategies help empower founders to navigate challenges, regain control, and ultimately improve long-term mental fitness, positioning their business for sustainable growth and success.

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This article was co-authored alongside Adithya Manoj and with support from Maria Najjar .

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