Behind the silence: Why do only 10% of founders open up to their investors?

Exploring the Communication Gap and Its Impact on Startup Success with Insights from Executive Coach Stephen Stynes

June 9, 2024

Behind the silence: Why do only 10% of founders open up to their investors?

In the high-stakes world of entrepreneurship, resilience is often prized above vulnerability. Yet, beneath this veneer of indomitable strength lies a startling truth uncovered by our research at Startup Snapshot: only 10% of startup founders feel comfortable sharing their stress and struggles with their investors. This finding, detailed in our report “The Untold Toll,” highlights a significant communication gap that extends far beyond individual founders, casting a shadow over the very success of their ventures.

To explore the intricate dynamics of the founder-investor relationship, we spoke with Stephen Stynes, an executive development coach celebrated for his work with startup founders and executives.

  • Support

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

    • 76% Spouse or family
    • 49% Cofounders
    • 23% Psychologist or coach
    • 10% Investors

    Source: Startup Snapshot "The Untold Toll" Report

Why do you think founders are so hesitant to open up?

What I see is that many founders feel that doing this type of work—whether it’s going to a coach, attending a development retreat, or engaging in any form of self-help—is not viewed well by their investors. They’re worried it points to a weakness. When it comes to investors, founders project a perfect image of themselves. They’ve pitched, they’ve raised funding, they’ve presented their best self. And the idea of having a therapist or a coach, or going on retreats, they’re reluctant to share that. And so they don’t share it.

What impact does this reluctance have on the relationship between founders and investors?

On the flip side, investors just don’t ask those personal questions. They don’t ask, “How are you doing? What are you doing for your own personal development?” As a result, we often see that founders want to do something like a three-day reflective retreat with other founders. But they feel, “I just can’t do that. I can’t take three days out.” It’s not a money issue; it’s usually around time. They feel that they don’t have the time. But more importantly, they are not sure that it would be viewed positively by investors.

What changes would you like to see in the founder-investor relationship?

I would love to see a more open dialogue between investors and founders. The single point of failure for any business is the founder and its leadership team. It’s not the technology, it’s not the market, it’s not the funding. It’s crucial that both founders and investors understand this and work together to ensure that the founder is not the point of failure for the initiative.

Who needs to take the first step in fostering this open dialogue?

I believe investors need to take the first step. I know some investors who are doing this. When they invest in companies, they also invest in the well-being of their entrepreneurs. They say, “We’re investing a million, five million, ten million in you. We want half a percent of this or one percent of this to go into your and your leadership team’s personal and professional development. That’s critical to us.”

How do these investors follow up on their commitment to the founders’ well-being?

They want you to report on it when you report on the business. When we do our quarterly reviews, we want to hear what you’re doing to look after yourself, to grow, and what you’re doing to grow your team. Because currently, for the most part, the only support that investors give is when there’s an issue—they offer to connect with recruitment companies to hire different people. That’s helpful on a small scale, but it’s not really the answer to this much larger problem.

As research like Startup Snapshot continues to shed light on the critical issue of founder development and well-being, I am optimistic that more investors and funds will adopt a supportive and proactive approach to nurturing their founders

Stephen Stynes

Stephen Stynes

Founder and Scale-Up Team Coach

Bio

Stephen is an executive coach with 30+ years experience working with entrepreneurs and senior executives.

Stephen Stynes

Founder and Scale-Up Team Coach

Bio

Stephen is an executive coach with 30+ years experience working with entrepreneurs and senior executives.

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