Running a startup is hard. Given that startup failure rate is around 90%, combined with an ongoing pandemic, global conflict, and more daily stresses of living and working in 2022, startup founders have more on their plate than ever.
The responsibility of leading a startup can weigh heavily on founders. And a new Chicago venture firm wants help those startup executives get access to mental health resources in addition to investing in their business.
11 Tribes Ventures, a new Chicago VC firm that began investing last year, gives founders cash, on top of an investment, for them to use toward their mental and physical health. The fund provides founders with 2% of its invested capital for founders to use toward therapy, life and career coaching, or other therapy resources, said Mark Phillips, 11 Tribes co-founder and managing partner.
With an average check size of $250,000, that means 11 Tribes is giving around $5,000 to founders to invest in their mental wellbeing, Phillips said.
"When we launched this fund, we didn’t want to be just another allocator of capital," he said. "It's all focused on how do we empower and help early-stage founders become the best version of themselves."
11 Tribes recently closed its debut fund of $10 million. It has so far invested in 21 startups, typically at the seed stage, with plans to back 30 companies from its first fund. Its portfolio includes Chicago startups like Cyber Pop-up, a firm led by former United Airlines cybersecurity expert Christine Izuakor, and GoodSport, a better-for-you sports drink led by Michelle McBride and SkinnyPop founder Andrew Friedman.
In addition to money for mental health, 11 Tribes also launched an organization called Kadence Group that sources quality career coaches and well-being counselors so founders don't have to spend time researching qualified professional help.
It's an effort to support startup leaders beyond simply writing a check, Phillips said.
"We think we’ve created a unique value-add," he said, adding that the venture capital industry has "got to stop using lip service. We have to stop hinting at ideas and we need to start acting in the best interest of entrepreneurs, because they're hurting."
Nearly three out of four entrepreneurs are directly or indirectly affected by mental health issues. In recent years, counseling services have launched to directly address the needs of startup founders, including Amity Chicago, which focuses on co-founder counseling.
Izuakor, the founder of Cyber Pop-up, called 11 Tribes a "trailblazer when it comes to truly cultivating a 'founder-first' culture."
"I think it's important for early-stage founders to be very intentional about the investors that they choose to partner with in the long-term startup journey," she said. "For me, that means working with amazing people who care not just about financial gains, but also care about equally important elements of the founder journey including mental health, wellness, life balance and personal growth."
