Q: What's the only industry in the world where 20% is regarded as a pass.

A: Venture Capitalism

Would you expect that by getting a group of educators, coaches and leadership experts together then asking them to sit down at a computer and start coding your latest killer App you’d end up with a great result?

Would you imagine that by getting a group of computer scientists, engineers and financial experts together then asking them to teach leadership, you’d help people become great leaders, in great mental health reach its potential ?

The latter is what the Technology Ecosystem has done for the last 70s years.

In this ecosystem, a 20% success rate is seen as good. The reason given it’s not higher “this industry is just inherently competitive and really hard”

But what if this were an abdication of responsibility, and a reflection of the industry's collective lack of self-awareness?

We already know 65% of technology companies fail due to lack of senior management skills (Sahlman and Gorman)

That means the true potential pass rate is 72%

This is enough to 5x commercial returns to investors in a fund, or angel investors,

In other words, the return of VC companies and angel investment groups globally are 1/5 of their potential.

That means 99% of fund managers the world over are failing their fiduciary duty to maximize LP returns.

“Growing the founder” does not mean mentoring and governance. If we denied elite sports teams elite coaching and replaced it with mentoring and governance, would a decline in win rate to 20% really surprise us?

Most VC firms talk the talk when it comes to “growing the founders”. Yet in my experience it’s the last item on the agenda when during economic tailwinds, the first line-item to be cut in a headwind.

This is next-quarter thinking at its finest.

Statistically, with 20 companies in your portfolio, right now unknown to you

- 1 founder is about to leave

- 1 is not being transparent to the board

- 2 are no longer innovating due to stress

- 1 is about to have a falling out with their CEO or co-founders

- 10 have not grown the next generation of leadership. As a result, come SeriesA raise, it’ll have cost a year’s lost momentum. 5 will not recover

- 5 will limp to exit. In 3 cases, the founder will be in poor mental health

This is your biggest risk. Board meetings once a month is not enough to uncover this risk. Even if you did uncover this risk, you'd have neither the knowledge nor the bandwidth to help them. Nor should you. It's not your job.

But it's someone’s job. And by not finding that person - most of your founder's will preventably fail, and experience a precipitous decline in their mental health. On your watch.

But of course, that's not your problem right? After all, you're doing 5% better than the industry average, and investing in tech companies is just an inherently risky business right?

Or you could take responsibility and get your founders the best standard of elite coach available.