Conversations: Overlooked Barriers

an hour, 12 links


Updated February 11, 2023

Chandratillake, Connatty: Class and Social Mobility

Suranga Chandratillake (Balderton Capital)

Ian Connatty (British Patient Capital)

Social mobility and class are topics not talked about enough in DEI conversations. We discuss both with Suranga Chandratillake (GP at Balderton) and Ian Connatty (LP at British Patient Capital), two key people in the UK ecosystem who are passionate about social mobility, class, and inclusive practice in venture. Together they bring to the table a multi-faceted view, from the perspectives of founder, GP, and LP. Chandratillake started, scaled, IPOed, and exited his company Blinkx in 2014. He then became a GP at Balderton. From the LP perspective, Connatty has been with the British Business Bank and British Patient Capital, two of the most important UK LPs, since 2010. Given their own backgrounds—both went to state schools in the UK—they are extremely passionate about social mobility and class, which is why we brought them together in this panel.

Interviewed November 2020

Social Mobility in the UK and in Venture Capital

Johannes Lenhard (JL): Let’s start with the basics: what is social mobility and socioeconomic class? Let’s think about it particularly in the context of DEI, which has been defined mostly by gender and now increasingly by ethnicity. What does class have to do with it all?

Ian Connatty (IC): In terms of economic literature, social mobility and socioeconomic class start with income distribution. Imagine stack ranking everyone’s income in five equal groups; the question is how likely are you to move from one group to another, both up and down? In the UK, it is actually quite unlikely that people move from the very bottom to the very top.* Particularly, people in the North East of the country felt in a recent survey that they had few chances to do better in life. The UK also has higher levels of inequality compared to some other high-income countries, as measured by the Gini coefficient.* In the 1950s, just after the war, there was a much higher amount of mobility, which slowed down in the 1970s.*

In the private equity industry, 69% of people went to an independent school [which you don’t have to pay for].* The problem of “social immobility” is particularly pressing when it comes to elite professionals, including venture capital.

When you look at the literature that describes the mechanisms at work, one theory assumes there are several types of capital that all individuals have. One is economic capital. For example, if I want to learn more about quantum computing, I can take a course that I pay for. Money and wealth are the enablers. The second kind of capital is social; if I want to know about quantum computing, I ask Suranga, who’s very learned on the topic. In this case I am using my network, built throughout my life, my upbringing, my education, and the work experience that I’ve had. But there’s a third capital that’s slightly more subtle. Cultural capital includes the way we behave, the words we use, the clothes we wear, norms of behavior, cultural references, books we’ve read, or the arts that we enjoy. All of these act as signals to indicate effectively what group we belong to in society. As practitioners, this framework is helpful for thinking about what we can actually do when it comes to social mobility and class.

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Erika Brodnock (EB): We know that you are both very passionate about increasing social mobility within tech and also venture capital. Is that all based on your personal stories or is there something else behind that?

Suranga Chandratillake (SC): Before VC, I was in the technology industry, building tech companies. Tech has plenty of issues, but it doesn’t have as starkly a socioeconomic issue as does venture. Since entering the venture industry, I’ve been anecdotally staggered by what Ian’s describing, in a statistical way. From a social economic perspective, venture capital is a narrow group.

As someone who’s managed to traverse systems, industries, and places, I’m constantly struck by how similar people are in each field, and yet how enclosed they are in each group. There are friends of mine, growing up in inner city Manchester, who I would never expect to stumble across in venture capital in London or tech in Silicon Valley. Equally, I wouldn’t expect the people I knew in the Bay Area to stumble across the other two fields. There’s absolutely no reason why these individuals couldn’t be successful in these different areas, considering raw skill, ability, or ambition. Like what Ian’s described, people typically start and stay in the place where they began. Amongst developed nations, the UK and US are very mediocre when it comes to this challenge, far worse than the Nordic countries, Germany, Canada, or Japan.* This annoys me personally and is a big motivator in the things that I do.

Tech is now incredibly influential in the world that we see created around us. The lack of different perspectives and diversity in the tech industry is a real problem, because technology is increasingly the thing that defines how we access many services outside what we would normally think of as tech. It is no longer a hidden-away industry that only does very specific things—it’s all reaching, all encompassing, and it finds its way into every aspect of our lives. If the people designing it, funding it, thinking about it, and shaping it don’t have a broad range of experiences in life, then they will likely craft something which is incredibly narrow in its perspective. And that worries me as well.

IC: My parents are from the 1950s, and benefited from post-war social mobility. Our family is very rooted in working class culture, albeit that my parents managed to get some upward movement and trajectory. But when I was around 10, our economic circumstances changed very quickly in the recession of the 90s. That is a trauma I’ve never really recovered from; it has effects to this day. For instance, when I’m in the office in London, people see me filling up my thermos flask, because I resent paying for a cup of tea in a café outside. Things like that never really leave you.

Overall, I was very lucky; we managed to keep our house and I went to a good school. But allowing for all of that, when I went to university and work, the gulf between me and lots of other people I encountered was enormous in terms of all three measures of that capital. At age 18 I thought we were a normal family, but I hadn’t really met anybody outside of my bubble. I had no idea that such wealth existed; I had no idea that you could be anywhere near as well-connected as the people I met. That sense of imposter syndrome, I suppose, has never left me even now.

EB: The word “bubble” is an interesting choice you used. I think about our bubbles from the perspective of COVID-19. The pandemic was often referred to as “the great leveler” in the early days. But from what you’ve just described, it has the potential of making people stay in exactly the same spaces, be around the same people, and create less opportunities for social mobility.

IC: If you take some of the recommendations that folks in the social mobility commission have made, they talk about helping people physically move areas. To access an elite professional in venture capital, chances are you must move. But now with remote working, people can stay in the place they grew up and not have to travel. We could all think about how to encourage remote working in a way that gives us access to a much broader pool of talent, beyond the people who can afford to live in a certain zone.

But you’re absolutely right. The pandemic could also go the other way, where we stay in our echo chambers and our bubble. There’s still time to influence the outcome of the discussion, but there is a real danger that it could accentuate current trends.

Filling in the Gaps of Social and Cultural Capital

JL: Let’s have some more concrete conversations about what it means to be more inclusive to people from different socioeconomic class backgrounds, and particularly thinking about the venture world.

SC: Originally, the big focus at Diversity VC was around gender. The reality is that gender diversity, or lack of gender diversity in venture, is disastrous. We always approached our strategy with a view that over time, it would extend into ethnicity, then socioeconomic differences—which interestingly, people find hardest to agree on. We’re now at the point where we’re beginning to really crack through.

Social and cultural capital are the largest gaps I see in the industry. Social capital is very simple. Many people just have no knowledge of venture capital at all. Given that so many people use the products of venture every day, the gap is ridiculous.

Future VC is a large internship program for premier venture capital firms. The whole point is to drive into groups that would never have considered venture capital. More importantly, for each one of those 20 interns, 20 more get exposure to the fact the industry exists. Even if they don’t join the industry, we now have new people who know about it, will ask questions, kick it around, and debate it.

Cultural capital is really about inclusion. Once interns join the firm, inclusion means helping them understand how to navigate the venture world. Internships at Future VC have structured education and constant informational feedback to help interns build cultural capital. It works—interns from that program are now in venture so building inclusion can be done.

IC: At the heart of inclusivity lies recruitment and retention, in terms of seeing beyond what people are like as a result of their background. Instead, we must focus on what people have the potential to become, when given the right setup. For example, at British Patient Capital we open days to give people the opportunity to learn more about our organization, without having the formality of an interview or structure process. We think very carefully about the wording of our adverts, where we put those adverts, all these little things that make a difference.

I encourage Suranga, and all GPs, to really work with your portfolio companies. It’s one thing to think about our own investment industry, but there’s a huge impact when thinking about the number of people that your portfolio company interacts with. This is a slow journey because these are not easy things.

EB: You’ve outlined an approach that says people start at the bottom and work their way up to the top. I’d like to see how your thoughts juxtapose the fact that we are worried about that ability to climb nowadays. Let’s delve into the impact of internships and associate positions over decision-making positions.

SC: From my point of view, social mobility is a valid challenge. I look at the day-to-day reality of what I see around me—my firm, the industry, and even outside the industry, there are sometimes few choices, given the pressure put on us by LPs. For example, when deciding when to support a GP, they look at track record extensively. All of those things point to a structure with some aspects that clearly feel out of date. I’ve never had the luxury to genuinely think, how could I rebuild this system entirely? What would that look like? Instead, my attitude has been, how do we start to change the structure?

Internships are actually very interesting to me. I have seen a much more targeted focus on recruiting a diverse junior team across internships, and also into associates, principals, and so on. The senior members of the industry realize there’s no great difference between these new people and the people they would have perhaps traditionally hired. But it will take a while. Of course you worry that you’re reinforcing the same structure. But I personally struggled to imagine how I would change that in the short term.

Scaling the VC Cottage Industry into Inclusive Firms

JL: Thinking about your respective roles as a GP and LP, what is the number one measure that you would change fundamentally about the venture capital that would create a more inclusive industry for people with different socioeconomic backgrounds?

IC: The single biggest impact is in the activities of the portfolio companies. When it comes to the LPs, now there’s real focus on the broader societal impacts of investments. Focus on ESG [environmental, social and governance] isn’t just [ticking boxes], but it embeds into the way they think about the world. This includes how much we pay people—are we paying living wages? Having people around the table that are very conscious of these topics, that have a completely different worldview, is helpful.

For LPs, fundamental change means creating structure around topics. How do you think about interest in your own firm? Who gets the carried interest and where does it go? How do you think about share options and remuneration in your company, all the way through the organization and not just the management team? As a result, how do your investments actually contribute towards the goals of society?

SC: One frequent topic of my European boards is share options. For portfolio companies, share options are often thought of as the reserve of more senior people in the team. The excuse is that junior team members in European companies don’t understand or want options; they’d rather have $2K more in salary this year. While that’s probably true, share options could change their lives. Giving more options, to say a 26-year-old in Berlin, is better for the company because it will engender better loyalty in the business.

Another change is quotas. Quotas are very hard, because it is not easy to define them. What are the metrics on which you find them? But let’s say you could do that somehow, at the very, very base layer to give people access to venture capital. While Ian’s right that the ultimate impact is in the work the portfolio companies do, my anecdotal observation is portfolio companies are actually a lot more thoughtful about inclusion than most VC firms. I actually think they have less of a problem, frankly. That’s why, internally, the whole firm is behind this idea that we should get our own house in order first, before we go off and preach to a bunch of people who actually are slightly ahead of the curve compared to us, in many cases. And then secondly, money is power. If you can change these organizations that control the choices of who gets money and who doesn’t, that trickles down dramatically.

Not enough people from diverse groups know about venture or have any understanding of its impact. Everyone, regardless of who they are or where they started, should have access to an insight into venture, through an internship, work, or experience early on in life. Many of those people would then self-select out because of disinterest, which is absolutely fine. But at least they understand what this opaque industry is about. Knowing the industry would lead to a much more diverse feeder base of talent. Inclusion has to start with enabling maximum exposure at the early stage for awareness. Down the line, this leads to a more diverse industry and decision-making, which then impacts the flow.

IC: One of the challenges we see is that venture capital is a series of relatively small partnerships—a stark contrast to something like the accountancy industry, which has four very large firms. You can think very hard about how these big firms do and put pressure on them more easily and publicly. Looking at social mobility in league tables, accountancy firms do quite well.* I do think some of this is to do with scale. For small VC partnerships, how could GPs work together?

SC: We shouldn’t forget that the VC industry was, until very recently, a tiny cottage industry. Silicon Valley did exactly that: it created silicon chips and picked between four or five different companies each year. Its outsized impact started in the last 10 to 20 years. Because it was this cottage industry, it didn’t have any of the things you’re describing; it is surely one of the reasons why people hire people who have done it before. In Silicon Valley, many successful VCs exist because their dad was a VC—to find the best talent available across the United States of America, the family business model doesn’t make logical sense.

Venture capital doesn’t work well as a large corporate structure. Firms lose something when they grow big; they lose the essence that comes from the manual, unstructured nature of building a company. So how does VC scale, in an industry where the participants are probably always going to be subscale? The recent Diversity VC Standard addresses this question. The Standard is an assessment of venture capital firms to promote best DEI practices and helps both funds to understand their own issues (and possible solutions) and aggregates data on the industry level. That is a tool that will push the industry forward over time, the kind we need more of.

De Jesus, Barger, Henriksen: Mental Health

Matthew De Jesus (Talis Capital)

Kristina Barger (Cognitive and behavioral psychologist and coach)

Øyvind Henriksen (Checkfirst, formerly Poq)

Since COVID-19, there has finally been more discussion about mental health for founders. We spoke with Talis Capital VC Matthew De Jesus, expert on mental health for startups Kristina Barger, and founder Øyvind Henriksen about the prevalence of mental health issues in tech. This is another invisible dimension of diversity that is crucial to take into consideration and normalize. In our conversation, we unearth a wealth of tools and tips for founders who struggle with their mental health.

Interviewed April 2021

Normalizing and Expanding the Mental Health Conversation

Johannes Lenhard (JL): Øyvind, you have talked about your journey into being a startup founder and being caught in between competing spheres of life: family, running a company, dealing with employees, and more. It is normal for many founders and VCs to be stretched thin. How is mental health not a big topic of conversations, given these circumstances are so normal and normalized?

Øyvind Henriksen (OH): I was the CEO of a software service company for about nine years. When my wife and I had kids, the dynamic of work and my whole life really changed in many ways. I suddenly had a hard stop at the end of every day, six o’clock. I found myself not having enough time to follow up on meetings. I was rushing to do the follow-ups in a taxi home from work, standing outside my front door, finishing one last email before coming in to the kids. Then it was family dinner with screaming babies, my wife was grumpy because I was late, it was an abrupt transition. It was hard to adjust to this new reality. I found it difficult to reduce my own expectations of my own output and to be able to fit work into a narrower window.

There are three reasons why I started getting into trouble. As the company grew up to 100 people, the role of the CEO changed. In the beginning, you are creative, you are out there, you are understanding customers, and you know everyone personally. The whole company is a movement and much less of a machine. There is a whole lot of chaos, but you know everything that is going on, and I was very comfortable with that. When we approached 100 people, the role changed. You are much more of a manager of managers of managers. It is more of a machine and less of a revolution. I enjoyed the work a lot less.

We had just raised a lot of money and we had an ambitious expansion plan to go into many areas. A lot went according to plan, but some things did not, and it needed to be dealt with. I found myself with less time available, not enjoying the work as much, and spending my time on things that were not going according to plan. That is a difficult position to be in. That was also my first experience with being really tired. Our kids never slept well, so I was not sleeping through the night, with two-hour sleep periods. I felt at some point that the company was driving me, rather than the other way around.

Thankfully, I had built up a support network. I had a lot of tools that had been set up around me that helped me deal with that situation before it was too late. I found that it was very much the support available around me that helped, but it really felt like I was flying close to the trees. I want to speak about these things because if there is anyone else in a similar situation, I want to tell them that there are good solutions out there, so you do not have to stay in that situation. But you have to act decisively, because if you do nothing, bad things are going to happen.

EB: You are currently working on Mindframe. Could you share some best practices and what has worked for you? What are you sharing with other founders in terms of being able to support this area?

OH: Mindframe is a mindful productivity app that allows you to separate between work and life, by improving the boundaries of your working day. When you finish up your day, you write down what you are working on, write down your experience of the day into a quiet place, and then leave work and be more present with your family and disconnect properly. The next day you can pick it up and get started. During the pandemic, life has become a blur, and it feels as if we are always at work. I have tried to distill some of the mindfulness and productivity practices I have learned as CEO for the last few years into an app.

Erika Brodnock (EB): Kristina, you have done a lot of work in the past with coaching startup founders. What is your journey into supporting the mental health of these leaders?

Kristina Barger (KB): I used to be a psychotherapist full time and I am also a cognitive psychologist. I now work in behavioral change, designing behavioral change software, and focus on decision making and mental health. I have been coaching and providing therapy to founders for six years. I do not actively recruit anybody now, but Y Combinator (YC) sends alumni in London to me. I work with Amy Buechler on that, she is YC’s psychotherapist and coach. I have also worked with some other startup accelerators, such as Zinc, which is where I met Erika.

I also wrote a study on founder mental health in 2019, with 271 founders. It was the first of its kind with a reasonable sample size, and was actually presented to the UK All-Party Parliamentary Group on Entrepreneurship in 2020. There were questions about founder mental health, psychological stress, and many other things. From that, I helped someone else build a business that targets providing mental health support to VCs, because we think that VCs are a better entry point into accessing healthcare for founders. I have a broad overview of founders, accelerators, VCs, and mental health, and how all these things fit together.

There are a couple of reasons why, even though we know mental health is important, we do not do more about entrepreneurship and mental health. One is that startups are relatively new. Mental health becoming less and less of a stigma is very new. It is a bit further along in the US, where “everybody” has a therapist. London is coming along more in the last two to three years, but it has only been in the last few years that there have been popular mental health campaigns. It is all coming along, just a matter of catching up.

Another factor is a particular stigma around founders: founders have this idea that they need to be very strong and that they cannot show any weakness. They need to present confidence and convince the VCs that everything is going to be great. If they show any cracks in that vulnerability, then potentially their funding will decline as a result. There is very much an incentive built into the system for people to pretend that they are okay.

Another aspect to consider is that mental healthcare is considered a very individualistic thing. It is something you must do yourself and you go in private to a therapist. This is the traditional view. Being a founder is also very similar. It is very much a solo endeavor, much of the time. These people have so much on their plates, and so little structure around, and they do not have HR, nor a culture built into the company. They just do not have extra time to self-monitor and even realize something like, “Things are getting bad and I should look for support.” Those are three of the main reasons, in addition to many others, that contribute to the situation.

EB: Matt, can you tell us about who you are and what you do?

Matthew De Jesus (MDJ): I’m the operating partner at Talis Capital and I have been with them for seven and a half years now. It has been a good journey to see how founders have progressed during that time from personal investment to where they are now with growth stages. As Øyvind mentioned, managing a team of 100 is very different to managing a team of 20 or under. Different geographies also have different impacts. I am from a VC background. Fundamentally as VCs, we have an inherent responsibility to look out for our founders first and foremost, because it is the right thing to do. It is also good for business. The pandemic has accelerated or exacerbated different issues. There has been a lot of talk about how this pandemic has had an economic impact on the startup as a company, but not a lot of highlights on the founders themselves. They are seen as an entity rather than individuals.

As Kristina mentioned, there is stigma to admitting that one has poor mental health, because that is, unfortunately, still seen as a type of weakness, which it is not. There are expectations of what founders must feel about themselves and they must believe everything is okay. They have their own role, the role of what people look up to them as, and then the role external investors expect of them. They have also got their role in their personal lives, which is the most important aspect, but everything is all-encompassing as a founder of the business. There is an associated glamour that destabilizes the ability to be able to speak out about mental health. Founders are always working at 150% and the environment that we have been in has created more alienation for founders. People are reluctant to talk about it.

Øyvind is an exceptional example of being able to self-regulate and be self-aware; many founders are not. Founders have the Maslow hierarchy of needs flipped. They think, “Do I have time for mental health or self-care?” Mental health is not a quick fix at all. Everything else that you do for a business seems to have an output and a physical tangible result that you can work towards, but mental health is very difficult to quantify, touch, and hold. Founders have an inherent fear that if they do not say that everything is going well, then VCs are going to uninvest. We have put our money into you and we can’t just take it out. We always start off our conversations with our founders about this and suddenly, you can see that their shoulders go down a little bit and they are a bit more open. If a VC ever did take money out for that, I doubt they would last long at all.

Mental Health Strategies for Founders

EB: Øyvind, from the founder’s perspective, what do you do when things are going wrong? Have you ever worked with anyone externally, such as a coach or psychotherapist? What would you say has been most helpful?

OH: There are a couple of things that I do differently from other people. I try to be very open with people and build relationships in that way, rather than being the charismatic persuasive boss. There are different styles for different people, and it is both good and bad—it can get you into trouble, because sometimes you are a bit too open. What I ended up doing was trying to see myself as more of an athlete, where they have a support system on all aspects. I had some issues with my hips from taekwondo, so I started working with a physical therapist. I then got a personal trainer and a business coach, those were amazing. Later on I also got a psychotherapist. She was very helpful, we would go for walks and talk about practical things, that was a style that I was comfortable with. I have labeled this “Team Øyvind”—a great group of people around me that I can check in with regularly.

I also have two peer groups. I had a more professional, facilitated, expensive thing where we would go away for a few weekends a year, and hang out and learn more about other CEOs. Then we had a founder group with people who raised Series A at the same stage as us. We meet every month and talk about startup life. It is incredibly helpful to hear that everyone else is going through similar struggles. Being part of these communities and having the individuals support me on a regular basis has been great. It is very helpful to be proactive in setting yourself up for success. Startup life is a roller coaster, and you can limit the impact of the downs by having a support system.

JL: Many people would be totally comfortable having a coach but then would not want to go to a psychotherapist or anyone that is a medical professional.

OH: I am grateful for our head of people who joined our company around Series A, she was a very vocal advocate for being open and transparent around mental health. That was five years ago, before it became more mainstream. Having it be within the culture of the company was helpful in me deciding to take that step and being open about it. I believe in making this a very public conversation, so that everyone knows that these things are very normal.

In terms of the coach versus therapist, I go to my coach about balancing home and work, and how to level up as a CEO. It tends to be much more about work, more about how and what to do, and forcing me to come up with my own answers. When I interviewed the coaches, some of them were a bit like psychotherapists, so there is a range in terms of styles. When I speak to my therapist, it is much more personal. She does not know that much about business, and it tends to be much more about me personally.

The Different Roles of Coaching and Therapy

JL: Kristina, what key findings came out of the founders survey? How do you think mental well-being should become a key strategic priority, both for the investors and the founders? Are there risks involved if that does not happen?

KB: The most pronounced was probably the gap between need for support and seeking out of support, especially qualified support. I am both a coach and a psychotherapist, and I have been straddling the space for six years. I have many people coming to me with the belief that a psychologist or psychotherapist is someone who looks only at the past, and that a coach is someone who helps them unlock and unblock and move forward. I have seen a lot of coaches doing what I would call Wild West psychotherapy. I am not always pro-coaches when it gets into that space; good coaches are great for business issues, but many are not properly trained and do not have the same amount of ethics or regulatory oversight that psychologists have. Most coaches are required to have a five-day certification, and then they have to have 20 paid hours of work, with some varied supervision. Then they are certified. A psychologist or a psychotherapist should have at least an undergraduate, a master’s degree, potentially a PhD and multiple years of supervised training with both the master’s and the PhD. As a client, you are potentially getting the same type of activities, but a different tool set and different ethics coming from one to the other, so often the outcomes can be very different.

A lot of people do not like the idea of going to a psychologist or psychotherapist, because that has a connotation of “something is wrong.” That is a stigma. So they go to a coach. I don’t recommend that. Coaches excel in skills training, but they aren’t trained in brain functioning, attention, memory, et cetera. They aren’t highly trained in communication skills and relationships, or development and growth. For mental health, it’s really better to go to a healthcare professional.

OH: My coach taught me this idea of writing things down pertaining to my business at the end of the day to clear my head, and then I would be more present with my family and evenings. She taught me how to prioritize better and focus more. My therapist convinced me to take a holiday; that was a much simpler approach of, “It does not matter what work is like, you need a holiday.” She taught me about this idea: “Think about yourself as having a tank of energy, and you need to find things that will fill your tank, and if your tank is empty, then whatever you do, you are going to feel exhausted and tired.” They had different approaches. One gives you more tools around work and so forth. Both are very useful, and there is overlap.

KB: What goes on in your session will depend on the person, and different therapists have different styles. Different coaches have different styles, but the training and the background is much more extensive on one side.

Founder Stress and Isolation

KB: For our research, the 271 founders were sourced online, so they were people who elected to fill out the survey on their own. It was about two-thirds female and most of them were UK-based. This was in 2019 and pre-COVID. Seventy-eight percent of them said that they felt lonely as founders. How much more isolated are they now after COVID? Many more are. There is much more pressure.

In addition, 96% of them had at least four symptoms of physical or psychological stress that they experienced monthly; 70% physical and 78% psychological. Headaches, backaches, upset stomach, insomnia, and others were in the physical category, and then worry, anxiety, low mood, feeling depressed (different from clinical depression) went into the mental health category. Seventy-eight percent reported feeling low and anxious as well.

Those stats are incredibly high. They are reflective of society, but also very much reflective of founders. London was considered the loneliest city in the world that year, and the founders were five and a half times lonelier than the average person in London. There is a lack of support. We know from all the psychological research that social support is one of the biggest buffers for essentially anything you go through, whether it is a life issue, a psychological disorder, or a psychiatric disorder, good social support helps mediate all of that and improve outcomes. Social support can be your family, colleagues, going into the workplace. It can be Team Øyvind. It is anyone helping you giving you social energy and support.

OH: The stress is very valid. With any startup, there are bad times and good times, often in the same day. The problem is that founders are very forward looking, so if you are going up or down on that day, it is going to make a big difference to your daily mood. Another thing that investors can do: is there education around, for example, how to deal with the stress or practice mindfulness? For me, the idea of writing things out at the end of the day really cleared my head and allowed me to sleep better. There are many commonly accepted and helpful best practices and a lot of education around the topic.

The Role of Investors in Mental Health Support

EB: From your perspective, would it be helpful for investors to take some responsibility for ensuring that all founders are provided with tangible support? Is there a difference between being a first-time founder versus someone who has founded before?

OH: It is common among second-time founders to give advice about taking care of one’s health. First-time founders know nine out of ten startups fail, but they are the one where everything is going to go well. A founder is optimistic and ambitious, right? You cannot tell them what to do. If I hear it from enough people, I might listen, but it is difficult.

EB: If there was something that they can dip in and out of as they needed to, like a resource group, that might be different to being told what to do.

OH: You also cannot get too close. There is this stigma around being open about stress. This is real and many investors are going to have this unconscious stigma. When things are going well, you can talk about your problems, but if things are going badly, investors are not the ones who should be helping you. Many founders will be uncomfortable being too close to investors. You can still facilitate that people get the support system, but investors would not do it directly.

KB: If I were an investor, I would have all founders go to a psychologist once a week or at minimum, monthly. It would be a condition of investment. People need social support. Typically, subclinical anxiety and depression are these features that we all have under times of intense stress. They creep up, are insidious, and lead to burnout. It is very much a slow drop off. If you start having support early, you prevent yourself from going down into that deeper decline. Once you get down, it takes a lot more work to get back out of it. It is a financially low investment to see a psychologist one time a week. If you see that person and you think you do not need them, it does not hurt anything to just go anyway.

Sixty-three percent of people said they had seen severe conflicts between co-founders, which creates stress and problems. On the one hand, if co-founders are on good terms, there is a sense of safety and openness, even if you feel that you must put on a brave face for your employees and for your VC. On the other hand, there is often a lot of conflict. If you have a psychologist or a coach, there will be confidentiality. My ideal would be the VC will say, “We’ll give you money and you’ve got to go to a psychologist once a week. What you talk about is between you and the psychologist, and we have no idea. I want you to go to have support because everybody needs support.”

In Øyvind’s experience, he already had family, so there was support in place. The founders that struggle the most are the ones that have the least support. This is particularly true for younger founders. Second-time founders may also realize that they need more support and that they cannot do everything on their own. Younger founders are less likely to have a family around and are less likely to realize that needing support is normal. They are the ones that I would support even more and encourage to look for support even more. They might also be the most resistant, but they still might be the ones who could benefit from it the most.

MDJ: We are about to implement our mental health support program. We took a step back and said, we know that there is an issue here; it is a big one and overwhelming to approach it. First and foremost, investors do not necessarily know how to approach a conversation like this in the first place. There is an issue where you want to do much more than just “pay.”

The first step for us, which is a first step every VC firm should do, is to do an anonymous survey of our own founders. We want them to give feedback to us to understand how we can help. We had three key takeaways from this. The first is that there is an appetite for mental health support from investors among founders: 53% do not use small groups or mental health services, but said they would like to. Interestingly, 30% do not think they need any kind of service, which again, is another point to address.

The second thing was there are a lot of barriers to accessing mental health services: 42% believe that the therapy is too costly, 24% say they do not have time for therapy or life coaching, 30% were not sure what they needed—which is a big issue because how would we know what is needed for founders if they do not know themselves?—12% did not think they needed it, but that is the minority.

The third theme we saw was that our founders were not training themselves or their leadership to navigate it in the workplace. Sixty percent of our founders would appreciate access to mental health training or workshops to understand their own and their team’s issues. Investors need to know how to approach the conversation and acknowledge and understand their portfolio and what they need to do. There are limitations, but you need that support there. You need to understand what your limitations are before you can start on this journey with your founders.

KB: Everybody is trying to figure out how to provide mental health, but there are psychologists. That is what psychologists do. Psychologists assess people and see what they need to help their mental health and their performance. A psychologist is the one who works together with their client to understand what their goals are and helps them then achieve those mental health and wellness goals. I always find this in startups and VCs, and I do not understand why everybody is trying to figure it out themselves. This is what a psychologist would do. The first session with someone is an assessment and needs assessment of what they believe they want and how they can be supportive. I do not do that work personally anymore, so I am not building that platform for myself. I am saying that we are here. We have been studying human behavior and wellness for a hundred years, while also being relevant and updating our knowledge.

OH: Most people do not know the different designations of what the different roles are, and the entry point into it is fuzzy. Leadership training needs to level up and learn about how to lead your team and mental health is a part of that. The other aspect is being part of a community of other people in the same portfolio. That is a way that people could jump into it and stay in it because they see other people doing it. This makes it more mainstream.

Emerging Best Practices for Investors

JL: Matthew, what best practices have you come across from your perspective? What are we not doing very well and need to do much better on?

MDJ: The first stage for us is mental health training in the workplace. We do not deliver it as VCs, but we facilitate it and make sure it is done. To Kristina’s point, we believe experts are needed. For us, it was understanding what the needs are and then to facilitate the first action plan. The second phase is arranging peer groups between founders and founder development to include mental health. VCs are not part of that group, because the point is founders helping themselves and each other. We are there to support you, but we cannot be part of that conversation you have with others, in order for it to work more effectively. Another thing VCs can do is make a point of having one-to-one catch ups that are not about prepping for board meetings, but about life outside of business.

Every time you speak, it does not have to have a result at the end of it. It does not have to be result orientated. It is about the connection, because currently investors do not know where to start when they feel they do not have the right connection with a founder. It is important to encourage a culture that is supportive of self-care by, for example, having 15 minutes of mindfulness to recalibrate before a board meeting. Do not use it to try to get something done. It is quite simple, but it is the small points that count.

VCs forget that though we are focusing on founders, the culture must be in their own investment team as well, and they need to focus on their own mental health to make sure they are in a good mindset. There is internal work to do. I have struggled during lockdown;* I like to meet with people, and the absence of that has been difficult. I have been going to a great internal support group that we have monthly where there are one-to-one catch-ups as a team with our seniors. It is a very open conversation.

As investors, we also must learn the warning signs of burnout. It does not mean that we are experts, but there are certain things founders have told us that they have noticed themselves, or people have told them, that is an indicator. If a founder is being erratic or quiet in meetings, it could be to do with mental health or other things. Those can be triggers. As an investor, those are things that you need to pick up on. The interactions with the founders should be human, authentic, and vulnerable. We are people, not machines. We need to genuinely listen, and not have our laptops out when someone is speaking.

As VCs, we want to understand how the world works very quickly, we have short attention spans, and we try to problem-solve immediately. Mental health is not something that you can fix in the short term. For founders, peer groups are hugely important, where you can be with like-minded people without investor input. That is your time to work with others. These aspects have been part of our groundwork, and we think other VCs should be implementing them as well.

KB: Social support is incredibly important, and it comes from the teams as well. Having one-to-ones that are human and are not about KPIs goes a long way. Peers, psychologists, coaches are all forms of social support. I hope you convince all the other VCs to also provide more support. Confidentiality is also critical, and it is important to create a safe space for the founders as much as you can. If they feel that what they say is going to get back to you, they may not feel safe enough to open up. Having safe spaces or close relationships help facilitate that, though very often you will still see people put up brave faces.

MDJ: If something is exposed, trust is gone. When the trust is gone, the relationship is gone. We should never underestimate the power of confidentiality.

KB: There is also an asymmetrical relationship between VCs and founders. Many founders perceive a big power difference between themselves and the investors. They are going to tell you what you want to hear more, and they are going to hide more, because they are afraid. It is important to be aware that the level of comfort that you have in the relationship is not the same as the level of comfort that they have. They are naturally going to be intimidated.

OH: The default state is that you are pitching the progress of the company to make sure that they follow on the next round. The idea of having regular one-to-ones with founders is something that you have to be careful not to impose, because people will show up to it out of politeness and see it as overhead. In my experience, many investors try to be helpful, and there are specific aspects that investors are excellent at advising on. On the other hand, there is a lot of superficial knowledge, and someone may have a better experience working with a psychotherapist about some things and an industry advisor about other things. It is important to be helpful, but there is only so much you can do to help. Imposing on time must be carefully thought through. Imposing one weekly session with a psychologist can be a lot for people, and they will balk at that level of time commitment. It will be hard to justify for people who might not see it as important. We need to figure out the right level of asking people to commit a certain amount of their time for support.

How the Industry Is Already Changing14 minutes, 38 links

When we started the research for this book, our goal was not to put together a critical and theoretically inspired book that practitioners would be unable to use. Instead, we wanted to unearth concrete ideas on how to change behavior, in a book that would not only inspire, but that would also be full of practical and tangible advice that could be easily applied. So, who else to ask but the people who are already doing things differently? Part III: Best Practices, which turned out to be the most substantive, is hence all about presenting the voices of investors and people within the ecosystem who have decided to practice what everyone else is preaching. We sought people who have already proven to be change makers—both in a small or systemic way, as a founder, funder, or funder-of-funds—to inspire change. Conversations range from learnings from VC and founder education programs and the influence of data and journalistic writing, to elaborate “how to” tutorials on increasing inclusion in a fund or running an angel investor program with a diversity focus.

The first section of conversations covers VCs who are doing things differently, looking at established players in the ecosystem and their decisions to tweak the traditional VC approach. We set the scene with a story of two VCs that have over recent years become famous in their own right. Mac Conwell, or “Mac the VC,” raised his first fund, RareBreed Ventures, completely on Twitter, and publicly documented the process, which involved thousands of calls with potential LPs. Mac was joined by Thea Messel, one half of Unconventional Ventures, a Scandinavian early-stage fund that has been fighting for more diversity in the Nordics for years. With Unconventional Ventures (UV), Thea has raised money to invest in “tech for good” startups with underrepresented founders; UV is also raising awareness and transparency in the Nordics ecosystem with their annual Startup Funding Report. In our conversation, Mac and Thea shared openly about the ordeal that fundraising is (or at least can be) if you are not a white male with a “strong network.”

In the next interview, we focus on an American story (with parallel stories in some European countries like France or the UK) about where investment money flows: predominantly to Silicon Valley, New York City, and Boston. Mucker Capital’s William Hsu and Monique Villa, alongside one of their portfolio founders, Allan Jones of Bambee, talked to us about their explicit focus on investing outside of Silicon Valley. At the latest, since AOL founder Steve Case has been making this point (including with actual investment dollars), we have been seeing a slight diversification.

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