Only 30% of founders are comfortable asking their investors for help. This VC explains why.

In the high-stakes world of startups, the strength of the founder’s relationship with their investors is paramount. Despite this, our recent data reveals a startling lack of transparency, with the majority of founders not fully disclosing their stress and challenges to investors.

To explore these findings and their implications, we sat down with Lisa Mikkelson, Global Head of Capital at Flourish Ventures, who shares her insights on fostering trust and open communication in the startup ecosystem.

Startup Snapshot: Lisa, thank you for joining us today. We have some interesting data points about startup founders and their relationships with investors from our research on entrepreneurial well-being. One striking statistic is that investors are ranked last in terms of who founders go to in order to discuss their stress and challenges. Only 10% of founders reported they turn to their investors. What are your thoughts on this?

COMMUNICATION

Venture needs some serious self-reflection as their portfolio companies don’t turn to them for support

Who do you talk to about about the things causing you stress?

76^% SPOUSE OR FAMILY
55^% FRIENDS
49^% COFOUNDERS
23^% SHRINK
10^% INVESTORS

Lisa Mikkelson: The fact that only 10% of founders turn to their investors for help is quite alarming. Investors should be trusted resources, there to support the founders and the company’s best interests. When information isn’t shared openly, it hinders our ability to provide the best resources and guidance possible.

Startup Snapshot: Why do you think founders are hesitant to share their challenges with investors?

Lisa Mikkelson: There are several reasons for this. Founders often feel the need to always perform at their best and share only good news. Sharing bad news or admitting to stress can be daunting because it might change the investors’ perception of them. This hesitancy is understandable but can be counterproductive in the long run.

Startup Snapshot: Who do you think should take the lead in changing this dynamic—investors or founders?

Lisa Mikkelson: It’s definitely a two-way street. Both parties need to prioritize open communication. Investors need to be good listeners, asking pertinent questions and showing empathy, approachability, and understanding. This fosters trust and encourages founders to open up. On the other hand, founders must strive for transparency despite the challenges. Without openness, investors may feel blindsided and the relationship can suffer unnecessarily.

Startup Snapshot: Another data point from our research on the boardroom again highlights the lack of open, vulnerable communication. 81% of investors reported that they want their portfolio companies to assign them specific tasks to help with, yet only 30% of founders feel comfortable asking for such help. What are your thoughts on this?

Lisa Mikkelson: This is an interesting point. Our most successful portfolio companies have CEOs and founders who aren’t afraid to ask for help. They effectively tap into their networks and aren’t shy about asking questions or seeking assistance. This is seen as a positive sign by most investors. However, it can be intimidating for founders to know what to ask for or to fear that their questions might expose weaknesses or inadequacies.

Startup Snapshot: How can investors help bridge this gap and encourage founders to seek help?

Lisa Mikkelson: Investors can help by showing their own vulnerability and sharing examples of common questions or challenges faced by other respected leaders. This can normalize the process of seeking help and make founders more comfortable with it. When investors demonstrate that asking for help is a sign of strength, not weakness, it can significantly improve the dynamic and effectiveness of their relationships with founders.