Investors Want You to Have Skin in the Game

Living month-to-month in order to make payroll, build their product and keep the wheels turning is a financial reality for many small business owners. Fortunately, it can be this kind of hard work that makes investors want to invest in you.

According to the JPMorgan Chase Institute, the average small business owner has 27 days of cash reserve. There may come a time that founders need to consider taking on debt or investment. 

At Techstars Startup Week in Columbus, powered by Chase for Business, a panel of entrepreneurs shared advice on preparing financial information to attract flexible capital.

Most Business Plans Suck; Get a Mentor

The majority of founders don’t know how to build out a detailed business plan. Our experts suggested asking for help and working with someone that can develop your business plan before seeking money from institutions.

“[Most small business owners] don’t know how to put together a business plan. They guess at a number and how to price their product,” said Jeremy Jones, consultant for Ohio Small Business Development Center.


“[It’s important to have] someone to put your plan together, rejections for that next level, and taking what you’ve done historically and tweak it forward. [We help you] use forecasting tools, project what cash you’ll be needing soon, and get a sufficient line of credit to get you through. You don’t want to manage your business based on your bank account. You might realize that you are burning through cash and won’t be able to replenish it.”

What You Really Need Is Marketing

Part of building out a business plan is figuring out your go-to-market strategy, and having the ability to execute this plan. By getting the product out there, gaining traction, and building revenue, founders may not need to take on as much debt as they think.

“When founders come to me and say they need money, what they really need is marketing,” said Jones. “It’s going to take longer and you’re not going to be rich next year.”

Skin in the Game

Just because you have a fancy pitch deck and an innovative idea, doesn’t mean someone is going to completely fund your dream. Investors want to see that you have your money invested in the company.

“If you’re not in the market yet, [don’t] expect someone else to fund it,” said Candice Matthews, founder of Hillman Accelerator.

You might also have to take on a side hustle to fund your company or build up savings before you quit your job and work full-time on the business, she said.

Get Your Credit in Order

Having bad credit could be a factor in whether or not you receive investments. While some financial sources have “character lending” programs and review circumstances around credit problems, getting your credit in order will certainly improve your chances of accessing capital.

“What your credit score says, reveals more about your character,” Jones said. “How you handle your credit [can be viewed as] how you’ll handle your business. Most of the time it’s not the ability to pay, [it’s not paying] your bill on time. If you have poor credit, it might be harder to get loans and you’ll need to justify how you’ll use it.”

Don’t Get Caught in the Spotlight

Raising millions of dollars can be really exciting for a startup, but it’s important to continue to forecast your cash flow needs to avoid draining your bank account.

“Don’t get caught up in the hype of startup life,” said Matthews. “[Startups] raise millions of dollars and create jobs, but how are your revenues and partnerships? Know how much you need to make to be profitable.”

Read more advice for entrepreneurs on TechCo

This article is part of a Techstars Startup Week content series brought to you by CHASE for BUSINESS. Techstars Startup Week is celebration of entrepreneurs in cities around the globe. CHASE for BUSINESS is everything a business needs in one place, from expert advice to valuable products and services. Find business news, stories, insights and expert tips all in one place at Read the rest of our Startup Week series on TechCo.

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Written by:
Tishin is a technology journalist and correspondent. She has written for TechCrunch, Demand Studios and Fitness, and has regular network segments on local Phoenix affiliate stations. She holds a Master's degree in Clinical and Sport psychology, and has covered many areas of technology ranging from 3D printing and game development to neurotech and funding for over 15 years.
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