The key to a winning VC/founder relationship? Empathy

I've worked in venture capital for 17 years. Over those years I’ve experienced plenty of highs and lows, and my fair share of wins and losses.

Recently, I’ve been reflecting on how similar the VC journey is to the founder journey.

If I’m frank—both can be quite stressful and lonely.

Whether founder or investor, we both enjoy the excitement, struggle with the self-doubt, and feel the loneliness. We must both master our emotions and navigate those of others. It can take years to establish whether a call we’ve made was right or wrong.

A VC-founder partnership can last for 10-15 years. As with any long-term relationship, you go through so many challenges together. You celebrate and grieve side by side.

What separates success from failure is the ability to get through crises and navigate turbulence—together. Getting it right requires emotional intelligence and empathy.

Why human approach wins

The founder’s life can be tough, and there’s rarely a shoulder to cry on. Yet your team needs you to stay strong—high energy, motivating, and never complaining.

Then you have the investors on your board. They are usually pretty demanding because they want to see returns on their capital. Most will have their own fiduciary duties to their LPs, so they put a lot of pressure on the company, and you, to succeed.

In these moments, it’s hugely important for VCs to relate to how the founder feels when he or she is sharing news that quarterly revenues are down, or that there are issues in the team, or that new legislation might challenge the business model.

Only very rarely can a founder immediately change these things. They would obviously prefer to be having a very different conversation.

The founder is always the most motivated human in the room. Unlike the investors, they have to sometimes bet everything on this company. They work 24x7 for the company—and when they come to the board to share unfortunate news, a founder is often looking for empathy and compassion.

As an investor, it takes courage to make the mental shift to actually see the human in front of you. Not a CEO, nor a portfolio company, but a person.

We believe trust is best built in an environment which encourages founders to share challenges sooner, when it’s still possible to help and change outcomes. Our founders know we stand by them and we’ll help them where we can. Experience tells us that’s when we both achieve our best results.

Also Read

VCs, startups seek government action on grey areas and policy clarity

‘Founder first’: What a VC can and can’t do

Speaking of help: we definitely won’t tell you how you should lead your team. You are the best leader for your team and your company.

What we can do is share what did and didn’t work for the other founders across our portfolio. It may be your first business, but we have over 20 years in the game and 110+ investments’ worth of experience we can call on for you.

Every time we encounter difficulty, we first try to understand its root cause. Is there anything we can do to make you feel better, to solve your problem, to address your challenge? That often means going beyond the numbers, beyond the facts, to the real core of a problem.

That’s our philosophy for the boardroom too. We are founder first, meaning we’re not here to fight—we care more about getting the best out of you. We try to cool the temperature in the room when things get hot, and always aim to steady stakeholder relationships during crises.

Of course, when I say “we are founder first”, that doesn’t mean we avoid unpleasant conversations. It’s not helpful to smile and stay silent when something is going horribly wrong.

If we see that what a founder is doing runs counter to what we believe works best, first of all, we challenge ourselves. Are we actually right?

Dogma can be dangerous. The environment we operate in is always evolving. Personally, I’ve been working with ecommerce portfolio companies for several years now. But I always ask myself: is this the same industry I think I know? If not, what’s changed?

I’ll always share my experience with founders, but I’m not running the company. I am here to help you and won’t pretend to know better. If I’ve invested in a founder but think I know more about the business than them, I’ve made the wrong bet.

The takeaway

Founders and VCs are on a very similar journey, featuring many similar desires, frustrations, successes and failures.

Building a startup can be a lonely endeavour, one laden with uncertainties and sleepless nights. The weight of steering a vision into reality, rallying a team, and making pivotal decisions can be isolating.

Strength is needed, but so is a recognition of your individual frailties. Ambition, yes, but balanced with humility and the openness to learn from success and failure.

It’s a similar story for VCs. We are normal people too, feeling the pressure and enduring sleepless nights—and our feedback loops take years to close as we discover how our investments perform.

Understanding our shared vulnerability can help us pave the way for an open and collaborative relationship. One where founders feel at ease sharing their challenges, and VCs take an empathetic approach to supporting them.

(Galina Chifina is a Partner on RTP Global’s Asia investment team)