How Savvy Financial Planning Could ‘Mental Health Proof’ Your Business

Founders face alarmingly high rates of anxiety, burnout, and depression, driven by relentless pressure, isolation, and especially financial insecurity. While conversations around mental health are improving, many entrepreneurs still suffer in silence, fearing stigma and reputational damage. This article explores the often-overlooked link between financial stress and founder wellbeing, and introduces an innovative approach to easing that burden - by allowing founders to unlock a small portion of their equity without losing control. By addressing financial anxiety alongside traditional wellbeing practices, this solution has the potential to meaningfully improve mental health outcomes across the startup ecosystem.

Multiple reports into the wellbeing of founders have found that this group face significantly higher rates of mental health issues; namely anxiety, burnout and depression. Shockingly, a LinkedIn study by Yael Benjamin found that a massive 72% of business owners experience mental health challenges. This is likely aresult of the high pressures of entrepreneurship, substantial stress, isolation and in particular financial insecurity. These factors are compounded by individuals prioritising business success and profits over everything else, such as healthy eating, exercise and sleep.

Moreover, many founders fail to reach out and find support due to the stigma around mental health and the worry it could prove fateful to their reputation. The LinkedIn study also found that a staggering 81% of founders conceal their anxieties from others, with half of those hiding their challenges from their ownbusiness partners. In addition, a 2018 study by Durham University found that entrepreneurs as a subgroup exhibit higher rates of suicide.

With such worryingly high rates of poor mental health it is critical that new business founders take practical preventative measures to reduce this stress and anxiety. Mental health support has improved over recent years, but often doesn’t focus on some of the factors facing entrepreneurs in particular. Whilst it will always be critical to take personal measures such as confiding in trusted friends, spending time in nature, ensuring proper diet, sleep and exercise and abstaining from drugs and an excess of alcohol, there is one avenue that is often overlooked; the reduction of financial stress.

Proving that financial anxiety is a population wide problem, the NHS describes the day to day impact of financial anxiety can have on individuals on its public website. Stating that a lack of financial security can lead to stress, anxiety, low mood, guilt and depression, ultimately leading to sleep problems and an inevitable lack of focus at work.

Venture Comet, a company that helps startups, scaleups, and SMEs become "investor-ready," plans to introduce a new equity releasing service, entitled NIBL (Nominal Incentive-Based Liquidity) which could revolutionise the problem. This service would permit founders to release a small amount of their equity by selling up to 5%, without giving up control or voting rights through a passive nominee shareholding structure. For example, a founder with a business valued at £4m who has 40%, actually has £1.6m of equity tied up but can be struggling financially day to day. Releasing 5% of this, (£80k) can be hugely significant, in terms of motivation and ability to stay the course. Safeguards will be put in place to prevent founders cashing out too early and spooking investors – that is, a maximum of 5% of their equity, one event per year with a maximum of £100k released after at least 2.5 years of business. The service would in effect create a financial safety buffer, protecting founders from the harmful effects of financial worry.

Given the prevalence of poor mental health among entrepreneurs and the impact on start-ups, any measure that alleviates this pressure, provides financial security and reduces stress and anxiety alongside the more traditional methods, should be gratefully received with open arms. Bringing with it the potential to transform the lives of those in the industry forever.