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What if my startup fails?

How to navigate the fear every founder has but nobody talks about.

Matt Munson
Matt Munson
11 min read
What if my startup fails?
What if my startup fails?

An unexpected text message

I received the following message from a good friend last night: “I think I am going to shut the company down. Have time to chat tomorrow?”

As I write these words, he and I are scheduled to speak later this morning. I am sitting in my office thinking about my friend and all that he has been through.

We met early in our journeys as founders. Both of us were simply trying to figure out how it all worked. We were navigating major questions about whether the people we had chosen to partner with were a good fit and whether the ideas we had chosen to work on had any merit at all.

Fast-forward nearly a decade, and my heart is heavy thinking of all that my friend has navigated to arrive at this decision.

He is not alone, and neither are you

Coincidentally, I have been working with a client recently who has been working through a similar decision (I will call her Jess; not her real name.) Jess wrote to me looking for help navigating burnout and some heavy questions she was holding about the future of her business.

When she first reached out, Jess shared that her company had raised millions of dollars from several high-profile investors. Her business spanned numerous continents. The product was used by noteworthy Fortune 100 clients. However, the traction was not coming fast enough to keep the board interested and the team energized.

Jess confessed to me on her first call that she was feeling overwhelmed, anxious, and depressed. She could not sleep. Nothing in her life felt fun or energizing any longer. She could not seem to find her way through the questions that were haunting her thoughts:

Where had she gone wrong? Had she let down her team, investors, and employees? Should she shut down the business? Should they pivot and try something new? Should the team try and buy out the investors?

The heaviest questions seemed to surround the what-ifs around the company failing:

  • How was she going to tell the team they did not have jobs anymore?
  • Would she ever be able to raise money again?
  • Would she be able to support herself while taking time to recover, find a job, or start something new?
  • How would she ever find her way back to energized?

The hard data

75% of venture-backed startups fail to return capital. 75%! (Source:

Take that in for a moment.

It is really hard to raise capital! The venture-backed founders I know represent some of the brightest, most educated, most hardworking, most resourceful, and most creative people I have ever met.

Any given venture capitalist will likely lead only 1–2 rounds per year. She may meet with nearly a thousand companies in a year and only choose one in which to invest.

It is very hard to win the opportunity to build a business with the backing of professional investment.

And yet…even with all that preparedness and selectivity, most companies who do receive funding fail.

What is necessary but rarely discussed

Try and try again. -William Edward Hickson

For the technology ecosystem to thrive, we need founders who try and try again.

Inevitably, when you attempt any complex endeavor for the first time, you make mistakes. Many of the companies we admire most were founded on the second, third, or fourth try. Success only came after early failures by the founders.

If all founders gave up after their first failure, employees would be short on jobs, investors would be short on companies to invest in, and the world would miss out on tremendous innovation.

And yet we do so little to resource founders who are going through the painful questions surrounding failure.

Founders like Jess often find themselves inundated with guidance, partnership, and resources when their companies are taking off. Yet when the company flounders, these same founders find themselves alone in their apartment, laying awake at night, trying to figure it all out.

Enough of that.

Let’s talk about failure. Let’s talk about what to do if your startup comes to an end.

Dealing with the voice in your head

What am I going to do if this fails? Surely no one will ever want to work with me again. No one will give me money again. How will I make a living? It has been so many years since I had a real job. Am I even qualified to do anything anymore? I will just be a failed, thirty-something-year-old wanna-be founder.

That is where the voice in my head went during my years as a venture-backed CEO. Often at 3 AM, while I lay awake in bed during one of the many downswings in the crazy ride of building a company from nothing.

If you find yourself entertaining a similar narrative on your own dark nights, you are not alone.

Every founder I meet has their own version of this story running through her or his head.

Often, alongside the ‘what will I possibly do with my life after this thing implodes’ questions comes a parallel narrative that goes something like:

  • I have let everyone down
  • I should have figured all of this out sooner
  • If I was a better [founder, CEO, leader, entrepreneur] this would not be so hard

Many of us founder/CEO types tend to find the job, at least as we understand it, a comfortable fit.

I have written previously about how many of us experienced childhoods marked by an early promotion to adulthood. We have grown, consciously or subconsciously, to view ourselves as caretakers of others.

When the chips are down, we are good at rallying resources and people and finding a path to keep everyone safe. There is a superpower there. However, there is a dark underbelly to that power.

The dark side often comes by way of a view that we are ultimately alone. If it is ‘me’ who is the one that keeps everyone [on-track/motivated/safe] then I am by definition alone in the hardest moments. I also am, ultimately, the one who carries the blame and shame when things go poorly.

It took me several years as a founding CEO to wake up to the very life-giving news that I was not actually alone in this way. I had a team around me capable of being real partners in the hardest questions facing our business.

The aloneness is a fallacy, albeit one many of us have a difficult time navigating our way out of.

Practical tools

We all have these voices in our head. Mine are quite loud and often persuasive. When I allow the voices to run the show, I find myself in pain and unmoored. One of the most practical ways I have found of inviting myself back to clarity and solid ground is through journaling.

If you are struggling today with your own voices, you might take some time with a journal on the following questions:

  • What is it that happened or is happening (the events as a someone observing my life might see them)?
  • What is the story I am hearing surrounding these circumstances (“This is all my fault,” “I deserve to be alone,” “I am no good at any of this,” etc.)?
  • Which parts of the story I am hearing are measurably true?
  • Which parts of the story I am hearing are measurably false?
  • Which parts of the story I am hearing are measurably unknown?
  • Based on what I am seeing here, what would help me to move forward with my feet more firmly on the ground?

In moments like this, as I sit with my journal, my effort is not to feel better immediately nor silence the voices entirely. That’s too much to ask from a half hour with my journal. The hope is simply to stop the room from spinning and to quiet to voices marginally so my wiser, more grounded voice might emerge. To allow myself to hear my own rationale mind, my own wise inner-coach, alongside the voices. To find some semblance of solid ground to stand on and from which to decide how to move forward.

In times where your own head is spinning with questions surrounding prospective personal or company failure, this grounding might help you as well to find some solid footing.

Finding partnership

Most founders I meet who are considering shutting down the business are getting hit with a pretty heavy sense of shame.

Shame comes with two difficult arrows. The first arrow is the pain. The second arrow is the aloneness.

The pain comes because we tell ourselves we have done something wrong. “I convinced all these people to invest in me, to work with me, etc. And now I have let them down!”

And it does not stop there. Shame is nasty because in addition to causing us pain, it often causes us to self-isolate. Self-focused anger and disappointment cause us to withdraw from others and spend time alone.

During my darkest days as a founder, when I found myself shame-spiraling over my own failure, I found it incredibly hard to reach out for support. And yet support was exactly what I needed most.

If you are face to face with the prospective failure of your business, your shame will tell you that you do not deserve help, support, or relationships.

Do not take the bait.

This is a time when support is most necessary.

Let your people in.

If you have not yet let your closest friends or family into the questions and pain you are carrying, invite them in.

If you do not yet have a therapist and a coach, find one.

This is no time to walk alone.

Once you have resourced yourself and found some solid ground, it is time to explore how to take care of your people.

Taking care of the team

The voice of shame might say something like: ‘I am letting everyone down.’

The truth, in startup life, is generally closer to ‘We did not make it.’

You had an idea. You went after it. You shepherded some resources and people around the idea and tried to make it happen. For some reason, things did not unfold as you hoped.

That is how startups go. Some hit, usually with a very heavy dose of luck and timing. Most do not.

It is easy as a founder/CEO to blame yourself for everything. Every hire and every decision made can arguably be mapped to you. But to say it is your fault entirely the company is failing is to ignore, at minimum, the role that luck plays in the success of every startup that breaks out and scales.

Even if you could do everything right (hint: no one does), without luck you still have a greater than 50% chance of failure.

Rather than taking another lap around the self-blame circuit, it may be helpful to take that energy and turn it toward taking care of the people who are going to be impacted by the shuttering of this business. The work at hand is this:

How can we live our values in the way we support our people even in this time of shutting down the business?

Severance planning

One of the most practical ways we, as leaders, can go to bat for our teams when a business does not work out is ensuring we do all we can to help bridge each of them to their next opportunity.

As we explored above, startups failing is a part of the equation. For the ecosystem to survive and thrive, for founders to start more companies, and for employees to agree to work for these risk-fraught, fledgling enterprises, we need to take care of people when things do not work out.

Many CEOs I speak with find it difficult to bridge this conversation with investors or board members, but the conversation is critical. And it behooves all of us in the ecosystem to do all we can for employees (including founders) when companies do not work out.

Job exploration assistance

Beyond financial assistance, practical assistance in helping each team member to explore and secure their next position can be an effective way of living your personal and company values even in the face of a shutdown.

When employees are faced with the news that the company they love is shutting down, it raises a lot of questions. One question at the top of the list will be: what am I going to do next?

Some employees may be living paycheck to paycheck, thus the question is immediate and material.

Others may be worried about how to share the news of their layoff with a significant other or children.

In either case, practical ideas and assistance in exploring other opportunities can be a caring and helpful overture.

You might begin by making a list of companies in your geographic area or in your domain that are hiring. Reach out to them and find out how to get your employees plugged in. If you are venture-backed, reach out to your investors for a list of companies in the portfolio that are hiring for the roles you are laying off.

A list of companies to consider, and an offer of warm introductions, can go a long way to alleviating anxieties for newly or soon-to-be unemployed team members.

You may organize resume and job-hunting assistance facilitated by leaders team members who have experience with the process.

Lastly, and most importantly, you might explore ways of ensuring team members have emotional support through the transition. You could:

  • Facilitate peer-support groups for team members going through the shutdown
  • Offer funds for therapy or career coaching sessions

Plotting your own life post-startup

Racing to the what’s next

Once you have a plan in place for taking care of your people and your customers and you have your arms around the administrative work surrounding the shut down of a company, questions about your own future may come racing to the forefront.

Some of the questions I carried myself during the many times my own startup was on the brink of failure, and questions I hear in coaching sessions from founders facing a shut-down, go something like:

  • Will I ever be able to start another company?
  • Will anyone ever want to work with me again?
  • Would any investor ever fund me again?
  • Will these feelings of [fatigue, numbness, anger, etc.] ever pass?

For us action-oriented founder types, the natural inclination is to figure out what’s next. To move, sort, get going.

However, the energy and creativity necessary to imagine and create something new may be decidedly absent.

In dating, following a breakup, there is a process to be felt and lived before one can find an openness to new love. There is grief to be felt. A loss to be mourned. Reflection to be had.

Much of that may be present at the end of a startup.

What you may find yourself most in need of is time, space, and healing.

If you are facing the end of your company, it is likely you have been living through what feels like war. Your own needs, joy, and well-being may have been sidelined for some time.

That’s no state for creating your next thing; if what you are seeking is clarity on what you would like next in your life, what may be most helpful is some time where that question is left aside until it returns organically of its own accord.

So how might you spend your time in the interim?

Separating the work at hand from the work at hand

After we sold my last company, I found myself in a period of transition that was disorienting. I did not really have a role in the business going forward. There was work for me to do around the transition, and around the managing of the company’s relationship with investors and the like, but it did not require the usually 40+ hours per week. Nor did it require my attention and imagination in the same way the CEO role had.

If you are facing a shutdown, you may find yourself in a similar liminal space.

What I found helpful was to mentally separate the practical work I needed to do from the emotional or mental processing work I needed to do. I began bucketing my week into two parts:

  1. The tactical things I needed to do to support the transition
  2. The things I needed to do to help myself recover, reflect, think, and heal

You may find it helpful to do the same. If you are facing a shutdown, make a list of things you need to do administratively for the week. Put the hours for that on your calendar.

Then, ask yourself, what would be helpful for me this week to support processing, reflection, and healing? Put the hours for that on your calendar too.

If you want to be an entrepreneur, learning how to reset between projects, irrespective of the outcome, is part of the craft.

Consider yourself an apprentice to healing and recovery.

As you work your way through the company shut down, invest as much time as you can in your own recovery.

This is a time to be selfish and self-caring. A time to make sure your own oxygen mask is firmly affixed.

An offer

As you work your way through this challenging time, know that you are not alone.

Most startups shut down.

Take that in for a moment.

Startup founders represent some of the brightest, most resourced, most motivated people on the planet. And yet most startups shut down.

You are in the majority, not the minority.

This, too, is part of the craft.

It is to our own detriment that we do not talk about failure and normalize this part of the experience.

There is an opportunity here to be part of the change. Talk about your experiences. Share with a friend, share in your founder groups, or share in writing. But please share.

If you would like direct support, please feel to reach out.

Wishing you peace, recovery, and many hours of self-care.


failurefounder burnoutcoachingstartup operations

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