Cold Calling in a Chilly Business Climate

When you're trying to raise cash, wooing VCs isn't the only game in town. Anyone who comes our way is a lead

By Sandy Oh

During the heady days of the dot-com frenzy, the general belief was that securing investments for your startup was as easy as cooking instant noodles. But for my partner, Fraser, and I, there's nothing instant about raising funds for, our online services company. Forget the sensational media stories of how entrepreneurs with an idea, be it selling toothpaste or caskets, can secure millions of dollars from investors after a two-minute pitch in an elevator.

When we started Cozzee, we didn't have rosy fantasies that VCs would drop wads of cash in our laps, but we also had no idea Nasdaq's tech meltdown was ahead of us. One important meeting early in our entrepreneurial lives, however, provided a hint of things to come. It was an aggressive VC, the sort who eats nails for breakfast. He had a tough comeback for every statement we made, every figure we ventured was challenged. He raked us over the coals, chewed us up, and spit us out.

But at the end of the meeting, the VC-cum-drill sergeant offered us valuable tips on tightening up our business plan and presentation. We survived the trial by fire and learned the hard way how to capture an investor's attention.


  We cast our net far and wide for potential investors: Anyone who comes our way can be a lead. A future backer need not come in the shape of a VC, despite the media's obsession with this particular class of investors. It might be a huge corporation, the private-equity arm of a bank, a group of angels, or any combination of all three.

According to a government survey, Singapore had 90 fund-management groups in 1999. They managed a cumulative total of $6.4 billion in venture capital, of which they raised $875 million in 1999 alone. Of the latter sum, VCs invested almost all of it in 423 projects, a third of based in Singapore.

To locate potential investors, it is essential to do a lot of digging. We keep abreast of developments by reading trade magazines and newspapers, gathering information on the players in the market, and what they have funded in the past. The Internet is vital to the process. Company Web sites are a natural starting point. After that, search engines and other sources are used to to ferret out further information about the potential investor.

Making use of contacts, old or new, is essential, while networking at various Internet-related events also can reap some useful names. But in situations where we lack an introduction or background knowledge, we resort to cold calling -- a skill gained during our days selling bonds, when it was part and parcel of our everyday business. After we agree on our pitch and what we hope is the right tack to take with a particular party, we send an e-mail or make a phone call to introduce ourselves and summarize our business. We keep this initial contact short and snappy.


  Generally, we try to highlight and prioritize elements of our business that will appeal to the company we are approaching (this is where our earlier detective work comes in handy). There are many facets to any business plan, and we work hard to match our strengths to a potential investor's area of interest to make the most favorable first impression.

After the initial contact, several things can happen. Let's start with rejection. The blow-off can take various forms, the most annoying of which is complete silence. It's good to get at least a note, and even better if it includes a brief explanation of why there is no interest.

More than half the time, however, things go better and we are granted an audience. That's when we prepare our pitch and business plan, which we try to make clear, concise, consistent, and an easy read. In crunching our numbers (revenue projections, expected profits), we're careful to make realistic assumptions. When it comes to producing these documents, I have to take my hat off to Fraser, a.k.a. Mr. PowerPoint, who churns out presentations as fast as he can down a pint of Kilkenny's beer. His previous life as an Asia-based banker, when he had to persuade bosses in New York or London to develop new business units and introduce investment products to the Asian market, is immensely helpful.

For meetings and presentations, we make sure we know our business plan inside out, get intimately acquainted with our numbers, and brush up on how we arrived at them. Investors display various styles in these meetings, from casual chat to hard-core interrogation. Whatever their approach, however, a hesitant answer guarantees rejection.


  With our new venture, Cozzee Staff, an online temporary staffing solution, we have had to immerse ourselves in an industry that's relatively new to us. During meetings, we are quizzed on all aspects of the business and might find ourselves talking to industry veterans with a strategic interest in our area. In such cases, we must demonstrate an in-depth knowledge to establish that we have not merely done our homework but may also have identified a business opportunity that may have escaped our audience.

Fraser likes to say, "You don't get a second chance." So we've learned not to be surprised. Still, it's impossible to anticipate every question a potential investor will throw. Watching the other party's body language can boost or reduce our anxiety levels. Are the execs nodding in agreement, or are they simply falling asleep? Do they make supportive comments, or express disbelief? Even if the latter is the case, it might not indicate disinterest because they could be playing devil's advocate. Finally, at end of meeting, what do they ask for? The process resembles the most agonizing kind of blind date.

Decisions aren't normally made at these first encounters, so it's a good sign if a second meeting is requested. VCs often want extra data in the interim, things like financing details and how we propose to recruit managers. So where do we stand? Well, there is no question that the market for funding has become extremely tight, so much so that it is almost boring to hear the comment, "If you had come to us this time last year, we would have been enthusiastic." The truth is that most VCs, incubators ("incinerators," as Fraser calls them them), and angels have been seriously burned of late. As the drill sergeant VC said to us: "What's really frustrating is how many dumb ideas got funding they should never have received, and how so many so-so ideas were executed poorly."


  These days, investors are looking over their portfolios, identifying which company can be saved, and which should be written off. The result is that almost no one is looking for new investments. It also appears that VCs who still have cash available are turning to the public markets with a view to identifying companies whose share prices have collapsed but which still boast a decent chance of survival.

We have not given up hope. Raising a mountain of cash was never meant to be easy. Perhaps, for a period in 1999, it wasn't so hard. We remain positive and currently have four investors looking seriously at our proposals. We know that we will have to accept lower valuations than we would like, but that hasn't shaken the faith we share that our business model is a winner!

Sandy Oh is a former investment banker who writes from Singapore, where she and her partner founded the Internet startup, ( The 29-year-old Netrepreneur writes regularly about the challenges she faces building her unusual business in Asia's young, vibrant Internet scene. You can e-mail her at

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