Anyone who's ever done cold calling for capital knows how grueling the process can be. But Phil Davis, CEO of BertSherm Products, in Cleveland, a marketer of personal-care products for teenagers, has learned to approach the financing of his business like a pumped-up candidate for president. Since 1988 Davis has persuaded 45 individuals to buy equity in his business. The investors range from his third-grade teacher to the former chairman of Revco drugstores, whom he met through one of his business-school professors. Here's how Davis coordinates his capital-raising effort:
Prospecting. Davis begins by approaching friends, relatives, and people he knows casually from his undergraduate and graduate schools. But he also scouts for possible investors wherever he goes. A frequent attendee of venture-capital forums and other business meetings, Davis doesn't hesitate to tell other attendees about his company. Usually, he says, he leaves with a pocketful of business cards.
The pitch. When Davis contacts prospective investors, his goal is to convince them that BertSherm, which sells its products in 18 states, can help them make money. Some people just aren't prepared to pony up, so he tries to persuade them to structure their investment differently. For example, when a supplier turned down his request for equity, Davis leaned on him for longer payment terms. Eventually, the supplier agreed to provide an extra 30 days.
Following up. Davis keeps his prospects' names on an active list long after most people would have given up hope. In fact, some of his most detailed records are about the individuals who have turned him down. (He keeps track of their reasons in the event that circumstances change.) One person whom Davis had courted for two years finally wrote him a $10,000 check. "I've got to hand it to you," the investor told Davis. "You get the award for persistence." -- Stephanie Gruner