What are the effects of long term money loss and agony for entrepreneurs in startups?


While the venture capitalists are dealing with a volume of startups and their founders, the startups are going up and down. 95% of the startups backed by venture capitalists won’t see daylight. The failure rate is too high. Once the decision is made that the startup is no longer serving the venture capitalists purpose, everything starts to go downhill. The venture capitalists are very aware of emotions within the company. Most of the time, the investment tends to stop. The same venture capitalists that looked interested before, are now questioning more. More and more people tend to ask questions about the dynamics of the company. Everything comes under microscope. What went wrong? What went right? In many cases, the venture capitalists would like to do everything in their power to try to help the startup, but also most importantly, they want to get information. The information will be valuable in their next choice of funding, in the same sector. In many cases, the original round money is already in the bank. Unless, the investors really want their money back, they might allow it to burn out, before shutting the door. This gives the entrepreneur a little more time, to run around, and find money. Gathering money is the responsibility of the CEO. There is lots of time spend, lunches, coffee, happy hours, dinner, ski trips and all sorts of things to connect deeply between investor and entrepreneur. Many schools like Stanford and MIT have mastered this skill. Once the decision is made that the startup is going to shut down, initially the founders have to do everything, to legally help in shutting down the business. There are lawyers involved, making sure there is no risk to the venture capitalists and investors. It’s like a head rush. But then afterwards, severe depression. It’s not easy to let go of power, if power makes you strong. There are severe health hazards and only entrepreneurs that have daily regimen like yoga, or some other way to release stress, can survive. The venture capitalists are also generally very stressed people. It’s not easy to deal with money because there is always responsibility and consequences. Money doesn’t grow on trees.