Economic crises are human crises. And yet, even in the worst of times, we still struggle to talk about mental health.
Last year, as Silicon Valley Bank was collapsing, Naveed Lalani and Brad Baum noticed there was a subtext to much of what they were seeing on then-Twitter—that, as founders scrambled to make payroll, mental health struggles were peeking through social media veneers. They decided it was time to act, creating the Founder Mental Health Pledge, now a nonprofit devoted to promoting mental health and well-being for startup entrepreneurs.
“We thought, this is absolutely the moment for us to do something,” said Alan Woodruff, the Founder Mental Health Pledge’s executive director. “We all felt just this personal drive to not only create this but do it in a way that was really going to create impact.”
It started with a pledge—asking startups and VCs to “make mental health a business priority.” They weren’t sure who would sign, but the tech ecosystem offered a resounding “yes.” To date, 748 investors and startup leaders from more than 42 countries have signed the original pledge.
Now, the Founder Mental Health Pledge has launched a new initiative, asking VC firms to begin including mental health clauses in their term sheets—and twelve firms have taken it on as founding adopters, Fortune has exclusively learned. That group of firms includes Melek Capital, Open Opportunity Fund, Forum Ventures, Red Swan Ventures, Roadster Capital, Evio Venture Capital, and Playfair Capital.
The clause expressly states that these VCs “support founders using a portion of the received funds specified in this term sheet to treat, at their discretion, the direct costs of caring for their mental well-being…as a legitimate, worthwhile, and encouraged business expense.”
Though I’m viscerally unqualified to make the case there’s causation, it’s hard to deny that there’s correlation between psychological struggle and profound achievement. One of my favorite books as a teenager was called Lincoln’s Melancholy: How Depression Challenged a President and Fueled His Greatness. (I was super cool, I know.)
As I was flipping through the book while writing this essay, I found this passage:
Lincoln’s story confounds those who see depression as a collection of symptoms to be eliminated. But it resonates with those who see suffering as a potential catalyst of emotional growth.
‘What man actually needs,’ the psychiatrist Victor Frankl argued, ‘is not a tension-less state but rather the striving and struggling of a worthwhile goal.’ Many believe that psychological health comes with the relief of distress. But Frankl proposed that all people—and particularly those under some emotional weight—need a purpose that will both draw on their talents and transcend their lives.
And founders, who often create things transcending their own lives, are especially prone to mental health conditions, data shows. Specifically, dopamine-driven mental health conditions, including ADHD and bipolar disorder, are incredibly common among people who become founders, psychiatrist Dr. Michael Freeman told me. Freeman, who exclusively works with entrepreneurs and is one himself, is adamant about the prevalence.
“If you want to be an investor, then you’re going to be investing in a lot of people with mental health issues,” said Freeman. “There’s no way around it, that’s just your reality. It’s highly likely that about 40% of the people you’re investing in will have diagnosable mental health conditions.“
But we still struggle to talk about it. For Dmytro Grechko—who last year raised a $1.5 million seed round for his no-code cloud infrastructure startup Deskree—the Founder Mental Health Pledge’s term sheet clauses are important, but they’re a start.
“Founders have to learn how to build and design products, how to fundraise, but they also have to learn about themselves, how to become a stronger, more mentally healthy person,” Grechko told Term Sheet. “That needs to be part of the conversation, and right now I think we’re pretty far away from that. But without great beginnings, it’s impossible to get anywhere.”
I’ve been slowly watching FX and Hulu’s Feud: Capote Vs. The Swans, and it’s so clearly the story of someone exceedingly gifted—whose screaming emotional pain ultimately silenced his talents. That’s seemingly happened to gifted entrepreneurs and technologists, from Tony Hsieh to Aaron Swartz, leaving careers devoted to innovation unfinished.
So, investors may ask: How could I entrust millions of dollars to someone grappling with mental health issues? But data suggests that’s fundamentally the wrong question. The right question, I’d argue, is this: Can you afford not to?
Introducing “Ask Andy”… In my first week at this job, several of Fortune’s top editors told me I absolutely had to read Andy Dunn’s Burn Rate: Launching a Startup and Losing My Mind. I’d bypassed it for years, imagining another “I made money and triumphed over all” story. But Dunn—who cofounded Bonobos and is a strategic advisor for the Founder Mental Health Pledge—subverted my expectations with his very first lines: “This book isn’t what you think it is. This is not a self-aggrandizing tale of entrepreneurial success.”
And it wasn’t. Instead, Burn Rate is a kinetic, honest, and nuanced memoir from a founder who built and sold a successful startup while struggling in deeply painful ways with an undiagnosed mental illness. Some lines I think about a lot: “A small bid for help can be, privately, a gigantic effort, imperceptible to its recipient, and crushing to the bidder if rejected.”
“Ask Andy,” debuting later this month, will deliver more of that hard-earned, empathetic wisdom. It’ll be a recurring advice column geared towards founders, startup executives, and investors, for bids large and small. I couldn’t be happier Andy’s bringing so much of himself to Fortune—and to you. Send Andy a question here.
See you Monday,
Allie Garfinkle
Twitter: @agarfinks
Email: alexandra.garfinkle@fortune.com
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Joe Abrams curated the deals section of today’s newsletter.
VENTURE DEALS
– Pi Health, a Cambridge, Mass.-based platform designed to streamline clinical trial processes for cancer therapies and treatments for other diseases, raised $30 million in Series A funding. AlleyCorp and Obvious Ventures led the round and were joined by Invus Capital and others.
– Sealed, a New York City-based provider of residential energy efficiency software and solutions, raised $30 million in funding. Keyframe Capital led the round and was joined by Cyrus Capital, CityRock, Fifth Wall, and others.
– Draftwise, a New York City-based AI-powered contact and negotiation platform for lawyers, raised $20 million in Series A funding. Index Ventures led the round and was joined by Y Combinator and Earlybird Digital East Ventures.
– Omni, a San Francisco-based business intelligence platform, raised $20 million in new funding from Theory Ventures.
– mmERCH, a New York City-based Web3 platform that creates fashion items with an NFT twin, raised $6.4 million in seed funding. Liberty City Ventures led the round and was joined by 6529 Holdings, Christie’s Ventures, Flamingo DAO, and angel investors.
– Mindfuel, a München, Germany-based data product management company, raised €3.8 million ($4.1 million) in seed funding. Project A Ventures led the round and was joined by angel investors.
– Nest Health, a New Orleans, La.-based in-home and virtual care provider, raised $4 million in a seed extension. SpringTide led the round and was joined by Alumni Ventures, Ochsner Ventures, and others.
– Orbio, a Köln, Germany-based methane emission tracking platform, raised $4 million in seed funding. Initialized Capital led the round and was joined by Y Combinator, the European Space Agency, and angel investors.
– Alithea Genomics, a Lausanne, Switzerland-based provider of solutions designed to simplify and streamline the generation of RNA data, raised CHF 2.8 million ($3.2 million) in a seed extension. Novalis Biotech Acceleration led the round and was joined by TechU Ventures and existing investors.
– Fluent Metal, a Cambridge, Mass.-based developer of production-grade liquid metal printing, raised $3.2 million in funding. E15 led the round and was joined by Pillar VC and angel investors.
– Work & Mother, a Houston, Texas-based provider of office lactation suites, raised $3.5 million in seed funding, from Building Ventures, The Artemis Fund, Claritas Capital, Second Century Ventures, and Alumni Ventures.
– 9 Lives Interactive, a remote independent game studio, raised $3 million in funding. Mechanism Capital led the round and was joined by Delphi Digital, Sfermion, 3Commas Capital, Momentum 6, Kosmos Ventures, Devmons GG, and CSP.
– STUDSON, a Tigard, Ore.-based maker of safety helmets, raised $2.5 million in funding. HIA BV led the round and was joined by existing investors.
– ROAR Games, a Brooklyn, N.Y.-based independent games studio, raised $1.5 million from The Games Fund.
PRIVATE EQUITY
– ArmorWorks Enterprises, a portfolio company of Littlejohn Capital, acquired Fox Valley Metal-Tech, a Green Bay, Wis.-based provider of metal fabrications for naval ships, submarines, combat vessels, and other defense applications. Financial terms were not disclosed.
– NewSpring Franchise acquired a majority stake in Shake Smart Holdings, a San Diego-based chain of healthy fast-casual beverage and food franchises. Financial terms were not disclosed.
– Zendesk, backed by Hellman & Friedman and Permira, agreed to acquire Ultimate, a Berlin, Germany-based provider of service automation. Financial terms were not disclosed.
EXITS
– Bharcap Partners acquired Insurvia, a Las Vegas, Nev.-based insurance services holding company, from Gemspring Capital. Financial terms were not disclosed.
– Meiser International GmbH and Dubai Transport Company agreed to acquire IKG, a Houston, Texas-based steel grating and industrial flooring manufacturer, from KPS Capital Partners. Financial terms were not disclosed.
OTHER
– AstraZeneca agreed to acquire Amolyt Pharma, a Cambridge, Mass. and Paris, France-based biotech company developing treatments for endocrine diseases, for up to $1.1 billion.
IPOS
– Auna, a Lima, Peru-based hospital operator, plans to raise up to $450 million in an offering of 30 million shares priced between $13 and $15 on the New York Stock Exchange. The company posted $1 billion in revenue for the year ending December 31, 2023. Enfoca and Juan Rafael Servan Rocha back the company.
FUNDS + FUNDS OF FUNDS
– Ballistic Ventures, a San Francisco-based venture capital firm, raised $360 million for its second fund focused on cybersecurity companies.
