Brian Nichols is the co-founder of Angel Squad, a community where you’ll learn how to angel invest and get a chance to invest as little as $1k into Hustle Fund's top performing early-stage startups

Crises happen. And when they do, the way a founder responds tells you more about their leadership than any pitch deck or quarterly update ever could.

Elizabeth Yin, co-founder and GP at Hustle Fund, has seen plenty of crises over her career. She has helped founders navigate fire sales, employee drama, co-founder breakups, financial emergencies, security breaches, mental health breakdowns, and even physical violence. When the SVB collapse hit in 2023 and sent shockwaves through the startup ecosystem, she immediately shifted from regular operations to crisis mode.

Her advice for founders in crisis situations is built on a single, counterintuitive principle.

Over-Communicate. Then Communicate Some More.

One of the biggest mistakes Elizabeth sees organizations make during a crisis is their failure to communicate swiftly and with poise. When things are falling apart, the natural instinct is to go heads down and solve the problem. Find all the facts first. Figure out the right words to say. Focus on the fix.

This is a big mistake. And it happens over and over, whether the crisis is a bank collapse, a pandemic, or an internal scandal.

It is much more important to communicate something quickly and update your messaging as you go than to try to craft the perfect statement four days later. The best time to do this is in the first 24 hours of a situation emerging.

Why? Because it is not so much about what the communications actually say. It is about how they make people feel. The feeling you want to convey is three things. First, you have this under control. Leadership is on it and people can count on you. Second, if you do not have all the answers, you will get the information and keep people informed as you go. Third, your door is always open.

If this is not done swiftly, even if you are actively working on a solution, people will lose faith in you because they have no idea what steps you are taking. Silence breeds anxiety, speculation, and worst-case-scenario thinking.

What This Looks Like in Practice

For founders dealing with a financial crisis, this means sending an update to your investors and team within 24 hours. Even if that update is "here is what we know, here is what we do not know yet, and here is what we are doing about it." That message is infinitely better than silence.

For co-founder conflicts, it means getting ahead of the narrative before rumors spread. Acknowledge the situation to your board and key stakeholders. Share your plan for resolution.

For product failures or security breaches, it means telling your customers before they find out on their own. Transparency in the first 24 hours builds more trust than a polished response a week later.

Elizabeth has seen founders who handled crises beautifully emerge with even stronger investor relationships than before. Why? Because the crisis revealed their character. Investors saw that this person could lead under pressure, communicate clearly, and keep their head when everything was going sideways.

What Investors Should Do

If you are an investor and one of your portfolio companies is in crisis, here is how to be genuinely helpful.

First, reach out immediately. Not with demands for information. With support. A simple "I saw what is happening. How can I help?" goes a long way. Founders in crisis mode are drowning in anxiety. Knowing their investors are in their corner, not panicking, matters enormously.

Second, help them think about communication. Many founders are so deep in problem-solving mode that they forget to send updates. A gentle reminder that their investors, employees, and customers need to hear from them can be the nudge that prevents a secondary trust crisis.

Third, connect them with people who have been through similar situations. One of the most valuable things an investor can do during a crisis is introduce the founder to someone who has navigated the same kind of problem before. That conversation can provide both tactical advice and emotional support.

The Practical Takeaway

Crises are inevitable in the startup world. What separates good founders from great ones is not whether they face crises but how they respond to them.

The formula is simple but hard to execute under pressure: communicate fast, communicate honestly, communicate often. Show people you are on top of it, even when you are still figuring it out. And keep the lines of communication open.

As an investor, you want founders in your portfolio who can handle adversity with composure. And you want to be the kind of investor who shows up when things get hard. That is what builds lasting relationships. At Angel Squad, members learn to evaluate founder resilience and build investor-founder relationships that survive the tough moments. Explore it at hustlefund.vc/squad.

The crisis is temporary. How you handle it is permanent.