3 Reasons Why VCs Should Embrace Executive Coaching

By Chris Gannett

The term venture capitalist is often associated with wealth, innovation and success. But despite perceived prestige, VCs face immense pressure.

Venture capital is a high-stakes juggling act with VCs responsible for running their businesses while ensuring portfolio companies and executives are productive and fulfilled. Daily, VCs confront challenges that go beyond the boardroom, delving into the world of human relationships and well-being.

Coupling these challenges with today’s turbulent investment climate, characterized by economic uncertainty, global unrest and unpredictable workplace shifts, pressures on VCs have only increased. Against this backdrop we ask: How can VCs not only endure but thrive? The answer may lie in an outside ally — the executive coach.

Here are three reasons VCs should consider executive coaches to navigate these challenges.

Create more resilient leaders

Recent reports found more venture capitalists turned to therapy to navigate the challenges of life and work. In the face of the COVID-19 crisis, many VCs went further, committing to offer therapy/counseling as services for portfolio executives.

Today, quality coaches understand therapy’s value and implement its tenets. The most adept professionals combine lessons grounded in therapy with traditional business advisory strategies to improve leader performance and effectiveness.

Coaches blend science, adult development psychology and mindfulness with company-building expertise, providing services that are catalysts for growth.

Coaches also look at leaders holistically, addressing professional and personal issues to help forge resilience. Findings from a recent study by leading academic journal Frontiers in Psychology suggest this is an effective approach, noting that executive coaching had significant positive effects for self-efficacy, psychological capital and resilience.

Identify and improve nonfinancial measures

Venture capital is an industry built on financial performance. When seeking new investment opportunities, VCs scrutinize financial measures like revenue growth, cash-on-cash return, and net burn/net new annual recurring revenue.

However, corporate financial health is affected by more than just numbers. Nonfinancial measures including company culture, employee engagement and customer satisfaction can significantly impact bottom lines.

In fact, a recent study found that companies that prioritize culture experience a 33% revenue increase. Another found companies with high employee engagement are 21% more profitable than competitors.

Coaches are trained to help executives enhance leadership presence, empathy and communication, which can improve company morale, engagement and well-being. For VCs, coaches who can strengthen skills that impact nonfinancial metrics should be viewed as an investment in both bottom lines and lives for the firm and its portfolio.

Provide a place for impartial introspection and candid conversations

Good leaders seek and understand the value of feedback, recognizing candid assessments are essential for growth. In the venture capital world, VCs and founders regularly exchange feedback, but the relationship dynamics can limit the extent to which conversations are honest. This is where the executive coach’s impartiality is invaluable.

Coaches create confidential spaces for introspection, enabling VCs and portfolio executives to gain deeper insights into their strengths, weaknesses and blind spots. Heightened self-awareness is essential for well-informed decisions, team cohesion and maintaining stakeholder alignment.

In high-pressure VC environments, a trained executive coach facilitates honest, candid conversations that may otherwise be difficult to initiate, fostering trust and transparency between VCs and portfolio companies, ultimately benefiting both parties.

In recent years, demand for executive coaching has grown as organizations seek to develop their leaders’ skills and prepare them for the future. Incorporating coaching has shown a remarkable ROI of up to 700%. In the demanding world of venture capital, where the pressures of financial success and intricacies of human relationships converge, executive coaching will be a valuable tool for the foreseeable future.

Chris Gannett is the founder and president of Gannett.Partners. Over the course of his career, Gannett has made a name as a successful angel investor and leading operating executive with experience leading startups, Fortune 500 brands and premier entertainment companies.

Illustration: Dom Guzman