Guest blogger Renz Kuipers, TechBanker

My career includes building and selling an eCommerce company and a connected car API startup. After seeing first-hand how banks miss out on servicing technology companies I decided to return to banking focused on the financial needs of Tampa Bay’s technology companies. Of course, startup capital is a big need.

To understand the mindset of bankers you need to realize banks generate a Return on Assets of about 1%. This means on a $1 million loan we net about $10,000. Conversely, if we write off a $1 million loan we need to put $100 MILLION in new loans on the books to recoup the lost capital. As such, banks must shy away from high risk loans. Remember, a bank takes my deposits, your deposits, and that of our parents and grandparents, borrows a little from the Fed and makes loans with that money. Therefore, with approximately 90% of startups failing, there is not much reason for a startup to expect a loan from a bank. Yup, expect coal.

That said, many business owners overlook the value of a solid banking relationship. Bankers are in the business of cash management. We have products that optimize the collection and payment processing of a company’s cash. Once a business moves beyond MVP, management should bring in a bank to lay out the road map on how to best optimize the company’s cash flow cycle and learn more about when bank debt becomes a viable source of capital for your specific business.

Sorry, no Christmas presents for startups, still need to slog it out; however, post MVP start vetting the bankers and find one who will understand your cash cycle and offers solutions to optimize your process – this is when a bank brings value and holiday cheer.

You can contact Renz at renz.kuipers@regions.com