How “killing it” is killing startups.
Most people in the startup ecosystem are in some way affected by the process of raising investment for a business. Whether you’re the founding CEO who is going out to pitch, the VC associate that is being pitched, or the startup’s employee who’s livelihood depends on that crucial next round of funding — it affects everyone in the entire ecosystem.
If you’re in a high-growth business that raises investment to survive long enough to achieve a bigger vision, then there is no doubt that it is stressful. The art of raising money comes with a lot of uncertainty. Your livelihood and in-turn the existence of your entire company essentially depends on someone else writing a cheque and taking a bet on you.
Anxiety & Uncertainty
The first way that the tumult of raising investment can manifest itself is in anxiety. The anxiety that often comes with uncertainty — “Will we run out of money?”, “Will I have a job in three months?” are both questions people either outwardly or inwardly express. This anxiety leads to overthinking, over analysing and sleepless nights accompanied by frequent e-mail-checking.
Feeling the pressure
The second is pressure. The pressure to raise the money in the first place, pressure to make payroll and pressure to hit the growth metrics required to unlock the cash.
Pressure and anxiety form a dangerous concoction where every day can feel climatic and every single conversation is make or break. It’s nail biting stuff, it’s down to the wire, there’s last minute drop-outs and heroic save-the-day moments. Every day is a rollercoaster and every day people ask — “Is the money in the bank yet?”, “Where are we at with the investor conversations?”
Working in a business that relies on investment is tough on your Mental Health, whoever you are. It takes mental strength and resilience to navigate that crucial fundraising period and come out on top.
However, I don’t actually think the pressure and anxiety which accompany raising money is the worst bit. I believe there is something deeper at play, something that investors and in-particular founders must be wary of.
Raising money can encourage you to be someone you’re not.
I was recently at a startup pitching event. It took the usual form, 8 startup founders, 5 minutes each and 5 investors as judges. The investors sat comfortably in their chairs at the front, at ease, wearing coy smiles as they introduced themselves and their respective funds. They vaguely elaborated to what stage they invested and decidedly avoided committing to what types of companies they invested in.
We (the audience) sat behind on uncomfortable benches, eagerly awaiting the performance. Whilst the founders eventually entered the arena after the usual technical difficulties.
Some were understandably nervous, others nonchalant, some confident.
Undeniably, each pitched their heart out, expressing dreams of grandeur, of changing the world, of vision, of mission, of purpose. Undeniably, some businesses sounded weak, some strong. Undeniably, it was too early to tell.
Under the spotlight, the founders were asked questions by the judges and given appropriate feedback. There was the typical good cop, bad cop performance from the investors and whilst some feedback was brutal but honest, some was just brutal.
The founders, of course, pushed back where they felt strongly and dutifully accepted the criticism where necessary. Some moved on with their tails between their legs, others were still purring, some were growling.
The whole event mildly mirrored some sort of David Attenborough documentary and even when business cards were exchanged afterwards and there were smiles and selfies all round, the whole event had made me feel very anxious.
This type of event happens very regularly in London and I’ve pitched at them myself countless times. I see the value for both founders and investors, especially for younger founders looking to get a foothold in the ecosystem.
Yet I can’t help but think that the very principle of a pitching event and what it stands for is the very epitome of every thing that is currently dangerous about the wider Startup ecosystem, in London and beyond.
The danger is; that the startup landscape is telling founders (and people working in startups) that they must live to impress others. It implies that they must perform every single day and that they must put on a show to win the affection of others who will define their success.
The gleaned pitch decks, the “hustle”, “the game” — it all promotes the notion that to be successful you must be someone you’re not. That you must “fake it until you make it.”
From the very top of the ecosystem, from the relationship between investor and founder we are promoting front, facade and in some cases outright dishonesty.
As you can probably tell, I’m very passionate about this, because I lived it for 3 years.
When I dropped out of University to start matchchat, I was a 22 year old student who knew nothing about anything. I had a fiery determination and naive enthusiasm for business. I was thrown from lectures into the accelerator, angel and VC investment world where I suddenly became obsessed with raising money, as everyone around me was. It was all anybody talked about and the way we were taught, raising money was success — it’s what everyone did.
So I did whatever I needed to do to raise money. If an investor wanted to meet at 6am in an outrageous location — I went. If I wanted to impress a VC, I scheduled an e-mail to go out at 11.30pm to pretend I was still working (I probably still was). If we needed to grow, we did anything and everything to make our vanity metrics grow at 30% month on month.
And when it came down to it, when the meetings arrived or demo day was around the corner. I pitched my heart out, I performed like a west-end actor. In the meetings I wore my armour, put my front up and went into battle; answering every question anyone had to throw at me for vigour and a vicious determination.
After the money was in the bank, the performance continued. I continued to work hard to impress our investors, to impress our staff and manage our team.
In fact, every day was a performance and as it turned out, I was living a lie, I’d not only been selling to everyone around me, I’d sold myself. It resulted in stress, pressure and crippling anxiety. It meant I never let anyone in, because I didn’t want anyone to peak behind the curtain — I only let them see the actor.
I was a product of my environment. A young enthusiastic entrepreneur that did what he thought he should do. I moulded myself on what VCs and advisors said, not on who I actually was or what I actually wanted to do.
Right now I see this happening to more and more people in startups and I believe the current startup culture is disingenuous. There are too many startup founders infatuated with raising investment, pitching to too many investors hunting for a superhuman to build them a Unicorn.
It means that there’s no transparency and there’s little honesty. Everyone’s “crushing it”, everyone’s “killing it” and everyone’s putting up a front. Everyone is so scared of being found out that you have an entire industry of incredibly talented people and most of them are faking it.
Thankfully, the solution is pretty simple and we all have access to it. It’s called authenticity. That means being open, honest and genuine with yourself and those around you. It means being vulnerable from time to time and admitting when things aren’t going well. It means saying things that are hard to say, asking tough questions and giving real honest feedback.
It means being less someone else and being more you.