The startup world is unpredictable. With ever-changing markets, funding opportunities, and economic conditions, one resounding trait separates good founders from the greats: resilience.
In this thought leadership session from day two of Venture Atlanta 2024, three expert panelists discussed venture capital challenges and why resilience is so important to the success of VCs and founders alike. Thanks to our panelists:
- Kendra Koch, founder of Divergently, a company dedicated to supporting neurodivergent women diagnosed later in life. As an entrepreneur who navigates both the difficulties of starting a business and the additional complexities of advocating for a frequently overlooked community, Koch brings a firsthand perspective on the necessity of resilience in overcoming venture capital challenges.
- Chad Harris, investor at the Open Opportunity Fund, which focuses on building a community of outstanding Black and Latinx founders. Harris’s insights are grounded in his experiences with the highs and lows of funding cycles and the resilience to sustain faith in ventures through various market conditions.
- Brett Haskell, Chief Performance Officer at Momentum Labs and a team psychologist for the New York Yankees and the National Women’s Soccer League, shares her expertise from the realm of sports psychology. Haskell discusses resilience as a critical performance enhancer in sports and business settings, emphasizing long-term success by prioritizing mental health for entrepreneurs.
- Claude Alan Woodruff, serving as the moderator, is a Partner and Chief Growth Officer at Momentum Labs and a Board Member of the Founder Mental Health Pledge. His extensive experience in supporting mental health for entrepreneurs provides a unique lens through which the topic of resilience in startups is explored, particularly concerning founder well-being and sustainable business practices.
Through their unique viewpoints, these panelists address the multifaceted nature of resilience in startups, from mental health and venture capital challenges to the strategic approaches of VCs supporting their investments through unpredictable economic climates. Thanks again to Goodie Nation for sponsoring this thought leadership session!
The Importance of Resilience in Startups and Venture Capital Challenges
Claude, inspired by the thoughts on suffering and resilience from Nvidia CEO Jensen Huang, asked whether resilience in startups was critical to success. If so, how do you see it play out in your areas of expertise?
Founder Perspective
Kendra began by noting that as a founder, resilience is essential. If you don’t have it, you’re going to struggle.
A lot of times, you have a big vision. You’re idealistic. You have goals, energy, and drive. But a lot can get in the way. Some you can control, most you can’t. These are the types of things that don’t go away in any business, industry, or type of company. If you don’t have resiliency, it will be challenging to get through them.
She also said that resilience is a measurement of how much stress you can handle. If you’ve never been stress tested, you won’t be able to handle much.
“The more resiliency you have, the stronger you are. The stronger you are, the more venture capital challenges you can take on. The more you can take on, the bigger and better company you can build.“
- Kendra Koch, Founder of Divergently
People think they need to scale back or take on less stress. Sometimes that’s not true. Often, you need stress to get stronger and handle future adversity.
Sports Perspective
Brett said that in sports, the more exceptional you become, the more failures you’ll face, and the more your exceptionality will be challenged by the exceptionality of others.
That’s difficult to cope with when you start as a big fish in a small pond and then become a small fish in a large pond.
Brett teaches her athletes that resiliency is the ability to adapt. To be sustainable in anything you want to be exceptional at, you have to be able to adapt.
“You may be able to have one good game or season, but if you don’t have resiliency, you won’t be able to adapt over time.”
- Brett Haskell, Chief Performance Officer at Momentum Labs
Brett teaches a lot about Michael Jordan. One thing people don’t appreciate enough about Michael Jordan is his adaptability. When he came into the league, he was a remarkable physical athlete. But he stayed in the league so long that his physicality stopped being what made him exceptional. He had to adjust and become a much savvier player. So, he adopted his signature fadeaway and excelled at that to overcome his declining athleticism.
To be exceptional for a long time, you have to be adaptable. Resilience in startups is all about adaptability.
VC Perspective
For Chad, VC portfolio resilience is going up in front of an investment committee to help get an investment by any means necessary.
This means talking about how great a founder is, how great their company is, and painting a rosy picture. But, the startup journey has tons of venture capital challenges. For 5 years, he must talk to the investment committee about why he has faith in this founder or opportunity, even in the downtimes, which can be tough.
How to Find Resilience and Overcome Venture Capital Challenges
Claude mentioned that in 2002, a Harvard Business Review article was released that claimed resilience is something you find out you have after the fact. So, he asked the panel how they gained resilience.
Brett stepped up first, saying when she trains someone for resilience and grit, she focuses on the athlete’s comfort and learning zones.
“Our brains are built to enjoy control and prediction, rather than uncertainty. To be resilient, you have to face uncertainty over and over and over again.”
- Brett Haskell, Chief Performance Officer at Momentum Labs
To get into the learning zone, you must teach your brain how to accept the realities of that environment and sit in discomfort. Once you’re in the learning zone, all of a sudden, you can adopt new strategies and skills, building an arsenal of techniques and tools to cope with those situations in the future.
But, to capitalize and develop from those moments, you have to reflect on them. We all face difficult situations. Some, from the outside, seem harder than others. But, you can gain insight from any venture capital challenges you face if you go back and ask yourself:
- What tools did I use?
- How did I get through it?
- How did it positively impact me?
- How could that impact me in the future?
This will help you build your resiliency blueprint for handling difficult moments and situations with consequences in the future.
The bottom line: We all face difficult things. The more you face them head-on, the more confident you become in handling uncertainty.
The uncomfortability inoculates you. Over time, you’ll be able to handle more and more discomfort.
“That’s what mental toughness is. The ability to tolerate more and more discomfort and not have your body react like it’s a threat to your life.”
- Brett Haskell, Chief Performance Officer at Momentum Labs
Mental Health for Entrepreneurs and Founder Resilience: Key Insights
Kendra said she builds resilience by starting with health: if you’re not sleeping, eating regularly, or taking care of yourself, it's much harder to handle things when you hit a rough patch.
She also emphasized building a support system:
“It’s important to have friends you can call, have mentors who get it, and have a community. Tough times are even tougher in isolation.”
- Kendra Koch, Founder of Divergently
Brett piggybacked on that by saying the brain is your most important muscle. You need good brain health: it’s a metabolic organ that needs fuel to function. If you’re not fueling it consistently, your brain isn’t going to work at its peak. It’s like putting crappy gas in your car.
Also, we’re neurobiologically wired for connection. It’s a protective mechanism by which we can handle more. Think about your brain like a rubber band rather than a piece of glass. The more you work your brain muscle, the thicker your rubber band is and the more you can stretch.
Lessons in Resilience from VC and Founder Perspectives
Claude asked the panelists about the importance of founders having honest conversations with their VCs. Here are the responses:
Chad gave the VCs perspective, saying that in 2023 most VCs were psychologists. He then described the different types of founders:
- The founder who puts their head in the sand and acts like what’s coming is not coming
- The angry founder who yells at you every time you say anything
- The avoidant founder that ghosts you unless they have good news to tell you
- The founder who sees everything as a challenge
With all of these different founder types, VCs have had to figure out how to best communicate with each one.
In terms of truly honest conversations, investors have information rights.
“The sooner founders give information to investors, the sooner VCs can help them make informed decisions.”
- Chad Harris, Investor at Open Opportunity Fund
Other companies view the act of failing as so “insurmountable”, that they have to break all types of legality to prove their success. That’s not the way to do it.
You need to be able to fail.
“I know VCs at Venture Atlanta who’ve said they only want to back founders who have failed at the first couple of companies because they have grit.”
- Chad Harris, Investor at Open Opportunity Fund
Brett jumped in on the conversation to add that Chad is talking about building mindsets around approaching certain venture capital challenges. The two mindsets are:
- Growth mindset: There is no ultimate failure. Because our brains are most primed to learn immediately following a mistake or a failure.
- Challenge mindset: If I push myself into these challenges, I’m going to get better inherently.
Often, we miss growth opportunities because we’re ashamed of the possible failure. But founders should see that as an opportunity.
“I was taught to reframe failure as AFOG: Another F***ing Opportunity for Growth.”
- Brett Haskell, Chief Performance Officer at Momentum Labs
If you can lean into the opportunity in front of you, your brain is in the best place to grow and develop.
How To Be Resilient in Tough Times
Claude then asked our panelists what founders and VCs can do to prepare for tough times.
To be resilient in tough times, Kendra thinks about why she’s doing what she is doing. She reminds herself why by reading through emails and reviews of customers who say “Thank you” and “Your technology is making a difference.”
As a former actress, Kendra also has a unique view on resilience.
“The misconception about acting is that it’s pretending. But for exceptional actors, their skill is getting into the truth of the character, the truth of the moment, and the truth of the story.”
- Kendra Koch, Founder of Divergently
As a founder, she reminds herself of the truth of the moment. If you do that, the problem is probably not as big as you’re making it, and the solution is easier than it originally seemed.
She also says to look at the situation from a different point of view. Would my team, customers, or investors also say my company is a disaster? If not, then why should I think it is?
Building a Resilience Culture in High-Performance Teams
Claude then asked the panel about their high-performance organizations. How do they support resilience in startups with intentionality?
For Brett, their company commits time and energy to it.
“Time is the premium for anyone trying to be exceptional at anything. What we give our time to shows what we value.”
- Brett Haskell, Chief Performance Officer at Momentum Labs
The high-performance organizations she works with dedicate their time to mental health for entrepreneurs. It’s a systemic part of the culture. They offer ongoing prevention and tools—it’s not something they do only when there are problems.
Chad says for the Open Opportunity Fund, resilient entrepreneurs are core to their organization. They invest in diverse founders from different walks of life who have gained muscles and calluses that inherently breed resiliency.
Most of the founders he works with already had a breakeven scenario because they are not used to capital being available. They’re already thinking “How can I continue to grow this company knowing that I can’t go out and raise more money right now?”
He added that DEI has ebbed and flowed. Nobody in his portfolio wants to receive dollars for being a woman or for their skin color. They want to build high-performing companies that can compete globally. If we invest in a black woman founder, she’s competing against everybody—not just other black women founders. They want people who can think big and who are scrappy.
Resilience as a Solution to Venture Capital Challenges
Resilience in startups emerges as a key differentiator in the tech space, where uncertainties and venture capital challenges are par for the course. The ability to adapt, learn from failures, and rebound stronger is what sets apart successful startups and venture capitalists. This adaptability fosters a culture of continuous improvement and innovation, enabling businesses to not just endure but excel in competitive and ever-changing markets.
If you want to see more highlights from Venture Atlanta 2024, check out our full conference highlights here. You can also read through our list of startup industries gaining momentum as well as our helpful state of startup investing in Atlanta article.
Be sure to bookmark our Resource Hub to get more insights from our team of tech startup experts.
Frequently Asked Questions
Why is resilience important for startups and their founders?
Resilience is crucial for startups and their founders because it enables them to navigate the inevitable venture capital challenges and setbacks inherent in launching and growing a new business. Resilience helps founders adapt to adverse situations, maintain focus on long-term goals, and manage stress effectively. Founders who cultivate resilience can better support their teams, maintain investor confidence, and lead their companies through volatile market conditions.
How can founders build resilience?
Founders can build resilience by actively developing mental toughness and adapting to venture capital challenges as opportunities for growth. This involves stepping out of comfort zones, facing uncertainties, and learning from failures.
What role does resilience play for VCs and their portfolio companies?
Resilience plays a critical role for VCs and their portfolio companies by helping them sustain faith and support through the fluctuating fortunes of the startup lifecycle. VCs require resilience to manage the narrative with investment committees, especially during downturns. For portfolio companies, resilience cultivates the ability to pivot strategies, withstand market pressures, and seize growth opportunities despite venture capital challenges.
How does resilience relate to mental health for entrepreneurs?
Resilience is deeply interconnected with mental health for entrepreneurs. Resilience helps entrepreneurs manage the psychological stresses of running a business, from handling failure to navigating uncertainty. Building resilience involves maintaining strong mental health through practices such as regular self-care, stress management, and seeking social support.
What practical steps can founders take to improve resilience?
Founders can take several practical steps to improve resilience:
- Develop a Growth Mindset: View venture capital challenges as opportunities to learn and grow rather than obstacles to success.
- Prioritize Self-Care: Regularly engage in good health practices, including adequate sleep, nutrition, exercise, and downtime to manage stress effectively.
- Build a Support Network: Cultivate relationships with mentors, peers, and advisors who can provide both emotional and strategic support.
- Embrace Adaptability: Learn to adapt strategies and approaches in response to feedback and changing circumstances.
- Reflect and Learn from Setbacks: Regularly reflect on both successes and failures to understand what works and what doesn’t, turning each experience into a learning opportunity.
- Practice Mindfulness and Stress Reduction Techniques: Incorporate practices such as meditation, breathing exercises, or yoga to improve mental focus and reduce anxiety.
- Set Clear Goals: Define clear, actionable goals that guide daily activities and help maintain focus amidst chaos.
