September 22, 2019
TLDR; When it comes to tech companies, we at Icebreaker.vc believe that healthy teams make the strongest companies. We also believe that the Nordics are the best place in the world for leveraging wellbeing. Therefore, our goal as an investor is to have the world’s healthiest and strongest tech companies in our portfolio by providing them with tons of support through our team, community and anyone who wants to chip in. We started with the first initiatives 12 months ago and we are seeing early signs of positive results now.
How has it come to this?
Thanks to the various research results and our own empirical evidence, we can be sure about one thing: people and teams who are healthy (both physically and mentally) will eventually outperform the ones who are not. Unhealthy ways of working and living will sooner or later lead to bad performance and burnouts. Everybody knows that. But still WHO and others report almost hockey stick level growth in workplace stress and burnout. Unfortunately, the tech sector is not making an exception.
During the last 2.5 years we have invested in over 30 tech companies in Finland, Estonia and Sweden. The vast majority of the companies have been teams made up of 2–4 founders at the time of our initial investment. Now these fast-growing companies have around 300 people in total and will most likely reach at least 400 by the end of the year. Some of them are so passionate about what they do that they forget their own wellbeing. Or maybe they have not forgotten it but instead they might think that they are somehow immune to the issues caused by lack of sleep. They might think that the only way to reach ambitious goals is by hustling 24/7. Examples of this are often showcased or even encouraged by influential figures like Elon Musk and Marissa Mayer, which might also play a role in developing this mindset.
The reasons may vary, but the bottom line is that we wanted to help the founders and their companies make wellbeing a priority. It’s not just morally the right thing to do, but it’s also in the best interest of our fund’s investors. Healthy teams make the strongest companies, which in turn makes the best investment returns.
An opportunity to build a competitive advantage - especially here in the Nordics
US startups (i.e. the ones that are usually our portfolio companies biggest competitors) are “unfairly” born with several competitive edges. They have better access to capital, they have a bigger domestic market, etc… But when it comes to wellbeing, it seems that Nordic companies are born with this competitive edge. That is to say, the Nordic infrastructure and culture is generally regarded as being more pro wellbeing when compared to the US. For instance, the law provides us with longer holidays and better support for families. It all starts with values, and we believe that it’s easier to make wellbeing a priority if there’s a supportive culture and infrastructure in place. After all, if health and wellbeing are not part of your core values, your daily choices (such as having a healthy sleeping habit versus not sleeping enough) will most likely be suboptimal.
To sum it up, we see a lot of opportunities on many levels when it comes to wellbeing. Firstly, wellbeing and health have intrinsic value. Secondly, healthy teams perform better and their overall quality of work is better — whether it’s about making decisions, writing code or talking to customers. Thirdly, recruiting high-quality professionals is perceived as the biggest challenge faced by European VC-backed companies. A company that can position itself as one that puts the wellbeing of its people as a priority will most definitely win the war for talent. Fourthly, our team members at Icebreaker get to enjoy these benefits too. We make better investment decisions and support our portfolio companies better when we’re healthy. We also enjoy our lives outside the office when healthy. Finally, there is an opportunity to make an impact that goes beyond our team, portfolio and community. That is to say, when other companies in the Nordics start to follow suit (not saying that there aren’t other Nordic companies showing a great example already), we will see a very positive impact on society as a whole. This might sound like a long shot, but let’s wait and see how the world looks like in 2025.
This is what we have done so far:
1. Encouraged our portfolio founders to prioritize wellbeing
As already said, one must start from the values that drive their daily decisions to get enough sleep, exercise, eat well and spend time with friends and family and not thinking about work. So nothing extreme but small things that one can do pretty easily if they have the right values in place. Therefore, as a first thing we started to encourage our founders to pay attention to their wellbeing and making it a priority. We discussed about wellbeing in our regular meetings, workshops and events with our portfolio companies. The positive feedback from the founders encouraged us to continue. For instance, one of the founders said to us:
“Both informal discussions and more formal support forums have highlighted the importance of taking care of the team’s (and one’s own) wellbeing. This is a very welcome focus in the startup ecosystem!”
The good news is that these improvements, such as sleeping and exercising more, usually have a fast impact on the wellbeing and overall performance. Therefore, some of the founders have already reported positive results. One of the founders could not have summarized it better:
”Taking better care of our wellbeing has already helped us to perform better as an individual and as a team.”
2. Started a mentor program with a group of experienced CEOs
Today we have a group of seven experienced CEOs mentoring and helping our portfolio CEOs become better leaders. One of the four focus areas of the program is wellbeing. The issues are addressed in every mentor meeting on a monthly basis. In addition to just talking in the meetings, the mentors help the founders set concrete goals for themselves. The goals may be something as simple as increasing their amount of sleep from an average of 4.5 hours to 7.5 hours a night. That is actually a real life example of a founder’s Q1’19 goal which was also successfully reached. Not surprisingly, the impact on the quality of life, wellbeing and performance was reported to be very positive. Another CEO also highlighted the link between wellbeing and company performance:
“It really helps to have a CEO mentor who has been there and done that before. I understood the importance of my personal and family’s wellbeing to my work which has made a big impact on my performance.”
3. Made wellbeing one of our fund's main objectives
We introduced our plans to our fund’s investors’ advisory board this spring. The feedback was encouraging and we decided to make wellbeing one of our fund’s main objectives. Our goal is not only to generate superior returns for our fund’s investors by helping pre-founders and founders build strong tech companies. We also aim to have the world’s healthiest tech companies in our portfolio by providing them with the needed support. It does not mean that we would aim for something impossible. Successful startups without hard work and the occasional struggle is utopia. In addition, we don’t believe that one should completely stop having a few beers with friends every now and then, eating junk food, playing video games through the night, or whatever the individual’s preference is for letting off steam when needed. It’s about the balance and there is always a line after which the performance starts to go down. Skipping lunch, exercise and sleep in order to get an additional hour or two with your laptop or phone will most likely do more harm than good — both in the short and long term.
4. Got first partners onboard
The first partners to join our mission were Heltti and Hintsa Performance. Together with these partners we aim to find ways to help our portfolio companies — the founders and employees. We started the collaboration and the first pilot projects this spring. Already now we have made good progress and received learnings on what really works in practice and what doesn’t. Eager to see what happens during the next few months!
We aim to build a long-term working relationship with our partners to find out what the best format is for us to provide support to our portfolio companies. We believe that by testing and constant iteration we’ll be able to find a mix of services with the highest long-term impact.
Icebreaker.vc is a venture capital firm and community on a mission to help build strong tech companies. We invest €50k — €350k in very early stages in Nordic & Baltic software-driven companies with a strong founder team. We have invested in over 30 companies with domain expert founders from companies like Rovio, Nordea, Pipedrive, Eniram, IBM and BCG.