economic recession maybe However, the relationship between founders and investors has not yet improved. According to a new Sifted survey conducted this month, 71% of startup founders feel their relationships with investors are getting worse, not better.
Almost 44% of respondents said their relationship with their VC had worsened in the past 12 months, and 27% said it had worsened. many A survey of 96 founders and senior startup leaders, mostly from early-stage companies, showed even worse results.
This is even higher than last year, when Shifted surveyed 49 founders and senior startup leaders and found that more than half felt that relationships with investors had worsened. It is on a decreasing trend.
Additionally, nearly half (44%) of respondents said investors are not helpful when it comes to business strategy, and nearly two-thirds (64%) said investors are not helpful when it comes to personal matters. .
Here’s what else I learned this time:
Profitability remains the top priority
VCs are still beating the drum of profitability. 84% of respondents said they are under more pressure to prioritize profitability or revenue compared to a year ago (about 86% said the same at the time).
“There are still many unanswered questions about whether to move quickly, talk to customers, and listen to a million fractional snake oil salespeople in order to become a global leader.” But at the same time, they need to cut costs, be lean, and focus on niche areas,” one respondent wrote. “It’s like reading a book where you go on a new adventure with a group of heroes, and then all of a sudden you end up with a Dostoyevsky-esque survival novel that reflects sanity.”
Investors are encouraging layoffs and cuts in new hires
Over the past 12 months, venture capital firms have continued to encourage portfolio companies to reduce costs (approximately 66% of respondents said they have received this advice), with the majority recommending headcount reductions (87%) In addition, the company is also recommending layoffs. New employees (70%).
Companies have largely followed that advice, with 64% reporting reducing the number of new hires and 57% reducing headcount and/or labor costs. 49% also saved money on office costs.
Unfortunately, V.C. I haven’t done it It has been especially helpful during this difficult time.
When asked on a scale of 1 (least helpful) to 5 (most helpful) how helpful their VC was with their go-to-market strategy, customer contact, marketing, etc., nearly 44% rated it a 1. One respondent described VCs as “completely inconsistent and lacking in accountability.”
Personal issues such as founders’ mental health and executives’ personal development were seen as even less helpful by investors, with 64% of respondents rating them a 1.
Almost 87% of respondents said the topic of founder mental health was never discussed at board meetings.
This is especially alarming given another recent Sifted study found that 45% of founders reported their current mental health as “poor” or “very poor.”
Venture capital is having a negative impact on founders’ mental health
Tensions in the relationship between VCs and founders are weighing on founders’ mental health, with 76% of respondents saying that an investor has had a negative impact on their mental health in the past 12 months.
One respondent wrote that it was “adding more pressure to an already stressful environment”, while another said they were affected by a “blaming culture and bullying behavior”.
Another added advice for other founders. “My family and my health come first. If your investors don’t want it, tell them you need help.”
Some advised fellow founders to think twice about whether they need to raise venture capital or whether they can find alternatives.
Founders seek more help with funding and connecting with customers
Several respondents said they would like more help with raising capital and finding new investors. Less micromanagement. Industry connections and customers.
One respondent wrote that they would welcome “real support and less judgment from people who have never made things.”
“Bring in a real expert or else get out of the way!” wrote another.
One entrepreneur told a venture capitalist that founders are human, that a pre-seed company can’t come up with the same amount of things as a Series D company, and that ‘growth at all costs’ “If we don’t do that, we won’t be able to grow.” It takes a little longer to go from “you’re an idiot” to “you’re an idiot if you don’t make a profit at all costs” than it does to change your mind on Twitter (sorry, Mr. ).
Several respondents had more fundamental demands for investors. They wanted it to provide more “empathy” and “humanity.”
However, not all founders experience difficulties with investors. 29% said their relationships with investors had gotten better or much better in the past 12 months.
One respondent wrote, “Some of our investors are great, some are not so great,” and another said, “Our investors are very supportive.” .
One founder said that all investors are angels in both senses of the word. “They are very positive and problem-solving focused, and they see me working hard and encourage me. My biggest advice to all new founders is to not make the situation worse. Choose an investor who knows the real bad news.”
