I have been seeing many posts about the latest Sifted survey claiming that founders don’t feel they get enough support from investors in their businesses. Here is my take on it.
First and foremost, founders must recognise that venture capital is a complex landscape, where every decision is a risk. It’s a reality that founders often find themselves at a crossroads of expectation and support. The Sifted survey has shed light on a harsh truth: many founders feel neglected, especially when it comes to their mental health.
As a seasoned founder and now an angel investor, I’ve navigated these waters and see both sides of the coin. Venture capitalists are not your adversaries but fundamentally allies in your entrepreneurial journey. Yet, it’s crucial to acknowledge that VCs operate within a high-stakes environment where their resources are allocated to ventures they believe will survive and thrive with minimal hand-holding.
This perspective is not exclusive to venture capitalists. Many angels, including myself, find it challenging to provide in-depth, sector-specific guidance to each and every investment they make. The SEIS and EIS schemes in the UK offer substantial tax benefits to investors, making it financially feasible for investors like us to distribute risks across a broader portfolio. What is a large sum for you as a founder may very often, after considering tax reliefs, be a relatively small sum for the investor such that they may shrug their shoulders if it is lost. Many see it as a high-risk but small investment that they are willing to make. This scenario often limits the depth of personal engagement with founders.
Adding to the complexity, it is paramount to recognise and financially compensate those who invest their time and expertise in your venture. Mentors and coaches will provide invaluable guidance, especially those who double as investors. They are driven by the potential financial return and a genuine commitment to your success. As such, it’s not just reasonable but essential to ensure they are rewarded for their contributions beyond capital investment. When adequately compensated, their expertise and mentorship can transform your business.
For you, the intrepid founder, my advice is clear: don’t just seek any investment, but the right investment. Strive for ‘smart money’—capital from investors who not only understand your industry but are also genuinely invested in your welfare and success from the start. The journey to find such partners may be longer, but the rewards—strategic support, industry insight, and genuine mentorship—can shape the trajectory of your startup. Choose investors who can transcend traditional roles and contribute significantly to both your personal well-being and your company’s success.
