Daymond John here.

I’ve been in the startup game for a long time. I was just 23 years old when my brand, FUBU, officially launched – and I’ve invested in hundreds of different startups since then.

Through my years of entrepreneurship and investing, I’ve learned a lot about the financial side of startup companies. I’ve met founders who know exactly what they need and how they’re going to get it… But I’ve also met countless founders who had no idea which steps they needed to take to secure the funds they needed (even with an outstanding product) or how to effectively use those funds once they got them.

I always felt for those underdogs because I’ve been there. I know how it feels to wonder what your next move has to be to stay afloat. That’s why the most important piece of advice I’ve ever received was to learn financial intelligence.

A salesman once told me, “Don’t spend all your money, kid. Because it’s really hard to make money, but it’s 10 times harder to keep it.”

Understanding business fundamentals, including basic finance principles is key to the survival of any business. Founders that can show their clients and colleagues those business fundamentals in action are much more likely to secure investments – and ultimately steer those investments towards life-changing returns for everyone involved.

Personally, it took me a while to learn financial intelligence…and it cost me big time. Let me tell you the story.

After finding local success with FUBU in NYC, I decided to travel out to Las Vegas for one of the biggest fashion trade shows. While I was there, I secured $300,000 worth of orders.

I couldn’t believe it. I was on cloud nine… until I realized that I had no idea how I was going to fulfill all of those orders. FUBU was still just a basement operation, yet I had to figure out how to make $300,000 worth of clothes.

I applied for loans at 27 banks… and I was rejected by all of them.

So instead, my mother took out a $100,000 mortgage on her home to turn the house into a small factory, buying equipment, materials, and resources to fill the order. The plan was to triple that money and put it right back into the house.

But here’s the problem: I still didn’t know how to manage my finances. $100,000 quickly shrunk to $500 and I was still late to pay the mortgage. My lack of financial intelligence might have been my downfall if I didn’t have my drive and support from the people who believed in me.

Countless entrepreneurs have been in the same position I was. Not all of them are fortunate enough to come out the other side. That’s why financial intelligence is so important. You need it in order to be a successful angel investor, and it’s something you should be looking for in a founder if you want to invest in their company.

Financial intelligence goes beyond just reporting numbers and business performance. It involves having a true understanding of how money works in all areas. Talking about finances can be tricky, but if a founder is lacking the crucial basic knowledge, they might need to do some more homework before talking with investors.

If you want to invest in a startup, look for a founder who can analyze data and apply it to the big picture. They should be knowledgeable about their market, competitors, and the economy. If your founder can talk about these things confidently, then you know they are going to be able to deliver when it comes time to execute.

As an investor, you can show you’ve done your research by helping founders create a consistent story with their data, and asking questions when numbers don’t add up.

Taking the time to learn the ins and outs of finance have made me a more proactive and successful businessman. It’s going to make you more money in the long run, too, so there’s no time to waste in getting started.

That’s all I have for today, but stay tuned. Next week, we’ll discuss why startups and investors are so crucial to the U.S. economy.

I’ll be in touch soon,

Daymond John