It wasn't that long ago that venture capitalist Michael Moritz of Sequoia Capital publicly expressed his favoritism toward company founders in their twenties. In start-up circles, it's common to find a bias toward younger entrepreneurs, who are seen as smarter and more innovative and committed.

But Moritz took it one step further when he said younger people "have great passion. They don't have distractions like families and children and other things that get in the way."

Most entrepreneurs buy into this belief when working with investors--even when they do have families and children. They believe the investor doesn't care about anything personal; he or she is only concerned about results and returns.

An unhappy founder is an unproductive founder

And this may be the case for some investors, but according to several VCs that I interviewed recently, there's a much better approach. "Every savvy investor knows that an unhappy founder is an unproductive founder," one told me.

In other words, the personal well-being of a founder--which includes a healthy family life--is an essential ingredient in the recipe for a successful venture. If an entrepreneur is having serious marital challenges, or has chronic health issues, or is undergoing a family crisis, this is very much going to affect his or her ability to perform.

On the other hand, entrepreneurs with strong marriages and robust family relationships have that much more going for them. Research has shown that spouses are the most important source of support for company founders, and robust social networks are one of the best indicators of future success.

Talking about personal lives can help the professional relationship

All the investors I spoke with were intentional about the conversations they had with founders. They wanted to know more about their hopes and concerns, as well as who the most important people were in their lives and how supportive they were.

"I've sat in your chair," one managing partner of a private equity firm likes to tell his investees. "Tell me about your challenges, and maybe I can be helpful. What's your vision for the company, and how can we give you the support to get there?" As a result, their entrepreneurs tend to collaborate more closely with them, be more transparent, and are more satisfied with their investor-investee relationship.

The bottom line? Even if investors don't seem to care about an entrepreneur's personal and family life, they should.

A risk that can pay off for all parties involved

One of the challenges, of course, is that entrepreneurs themselves may not feel comfortable sharing about personal challenges with an investor unless they are asked first. "They're afraid to be seen as not pulling their weight, or afraid to ask for something that's not offered to them," a longtime Silicon Valley venture capitalist explained to me.

But this VC has had multiple founders take the initiative to share that they had children with special needs, a circumstance that could affect their work hours, their travel, and their need for health benefits. Rather than being put off, he was grateful for their openness and found it easier to navigate an effective working relationship. "Knowing their family circumstances goes a long way toward developing reasonable expectations," he explained.

Investors, after all, are people as well--oftentimes juggling their own careers and families. "We're all deeply human," the private equity partner told me.

While it is a risk for entrepreneurs to talk about their families or to share about personal challenges with investors, it's a risk that can sometimes pay off. And the smart investor will take that knowledge in stride, doing what they can to support you so that success becomes a little more likely for everyone involved.

Published on: Jul 28, 2017