Venture Capital 3.0

Venture capital is changing. Capital is abundant and increasingly consolidated. The VC industry as a whole is shape-shifting to more of a service based business as investors realize they need to bring more to the table than just money.

Now more than ever, differentiation is critical to remain competitive across the VC landscape. But how?

The existential threat of any company pre product-market fit is building something people want. Post product-market fit, the threats all flow from people problems: co-founder conflict, burn-out, stress/anxiety, creating a culture that attracts and retains top level talent etc.

Concurrent to that, today’s startup culture encourages companies to scale and execute at breakneck speed often at the expense of sustainability and integrity.

At my new fund Alpha Bridge Ventures, differentiation comes with supporting a company’s most important asset: its people.

We’ve spun out an integrative leadership platform called Atlas to better support founders in building up themselves to then build sustainable businesses.

You can’t take a company further than you’ve taken yourself. This means that the physical, mental, emotional, and relational aspects of a founder’s life must be in order for them to win.

Atlas works closely with founders and members of the startup ecosystem in finding tailored, affordable, convenient, and confidential support. Leading requires team support, and no one should build a startup alone.

“People look at him and think, This guy’s really got it together! He’s brave!” says Toby Thomas, CEO of EnSite Solutions. “And the man riding the lion is thinking, How the hell did I get on a lion, and how do I keep from getting eaten?” –As told in Inc. Magazine

Data Supports Our Mission

Our partner, Dr. Kari Sulenes PsyD, Executive Director of Atlas, conducted a qualitative research study when designing Atlas. This research, combined the academic literature on the founder experience, was a critical first step in building a personalized, holistic support program. The insights gained from one-on-one empathy interviews with founders shaped our perspectives. We observed that founders are at higher risk than the general population for mental and emotional health issues, as well as compromised immune systems.

It’s sobering to realize that founders are 50 percent more likely to experience a mental health condition compared to the general population, according to a recent Michael Freeman study.

And that 65 percent of failed startups attribute their failures to avoidable “people problems” like co-founder conflict according to a study cited by Noam Wasserman at HBS in his book, The Founder Dilemma.

Norwest Ventures conducted a CEO Journey Study which validates the personal sacrifices founders make such as a toll on their personal life, sacrifices to their happiness, health and their relationships, missing important occasions outside of work and fear of failure. In addition, founders want to spend more time developing greater expertise in soft skills, primarily in public speaking, planning and organizing, conflict resolution and stress management.

Lastly, Google’s Project Oxygen asked the question, “what makes a great manager”? The results further supported the importance of soft skills within leadership positions — Google polled their employees on what the most important qualities are for managerial success within the company and the seven top characteristics were all soft skills.

A New Dynamic Between Investors and Founders

Humans are the power and drivers in any company. Healthy, happy integrated founders are better leaders and better leadership is a force multiplier for company success.

In the past year, since launching Atlas, we have learned what founders need personally and how to better support and empower them in areas of self-care and leadership.

So how can we integrate all of this into our work?

Step 1: Give Permission

The current culture does not encourage open sharing. Founders often believe that any personal struggles they have will impact the image of their company’s success. This makes it extremely difficult for founders to ask for help when they need it.

We as VCs have the opportunity to lead by example and, in sense, give permission to our founders to prioritize their personal wellness alongside their company goals.

We should embrace our own vulnerability, speak openly about our journeys and challenges we face and start having real conversations with our founders about what they are struggling with personally and ways we can help. We need them to know we understand.

When Brad Feld started blogging about his mental health issues, people came out of the woodwork. He is a well respected visible leader who set the example and gave people permission to talk. The people who wrote to him were very successful people, very visible, very charismatic — yet they had all struggled silently. They wrote that they felt they couldn’t say anything, that their personal emotional struggles were a weakness or something to be ashamed of. They felt like they were hiding, which makes them more isolated.

If we don’t give founders, as well as ourselves, permission for self-care no one will. Our voices are powerful and can give founders the courage to talk about the personal sacrifices they are making in service of building their companies.

Step 2: Take Action

Step two is to provide resources aimed at personal growth. At Atlas, we are in the process of building out resource toolkits and providing practical advice that investors can use for themselves as well as for their portfolio founders.

At Alpha Bridge, we apply $25k worth of Atlas services to the founders we invest in. Our hope is to set a new precedent in VC to literally invest in the people behind the business.

Our hope is for this to become a collaborative movement amongst VC and investor ecosystems. Last week we launched a co-created #pledgetofounders campaign to set a new precedent for these types of conversations.

Step 3: Craft a New Narrative

Successful entrepreneurs achieve hero status in our culture which perpetuates the problem with overinflated mission statements and harmful, misguided quips that perpetuate #hustleporn and #toilglamour.

Silicon Valley romanticizes the founder journey as being a solo one, complimented by dangerous rhetoric from influencers and leaders.

This needs to be counterbalanced with narratives that are more humanistic and empathetic towards founders and their needs.

Narratives that create a more level power dynamic as well as a safe environment for founders to feel comfortable reaching out to the investors entrusting them to build long lasting sustainable companies.

Narratives that are prescribed using data and evidence to back up claims that working harder and hustling don’t always equate to higher levels of productivity.

A Call To Action For Investors

It’s time to make this subject matter less taboo and bridge the communication gap between founders and investors to create a new dynamic rooted in trust and empathy.

Young founders just getting started look to their investors for guidance. Let’s strive to be change agents who shift an entire culture by simply opening up about our own journeys and reminding founders we are here for them and have deep empathy for their journeys.

We as investors need to protect our most important asset and act as partners in supporting founders well-being. The power and influence we possess can be wielded for either good or bad. Let’s opt for the good.

Our goal should be to create an entirely new paradigm between investors and founders. One that is rooted in helping founders grow into world-changing leaders.

It starts with us.