Offering up some advice for potential and existing crowdfunding campaign organizers, Crowdcube and Eureka Communications consultant, Ariane Comstive, revealed the importance of investors relations in a new blog post.
The UK-based equity crowdfunding portal and Comstive shared:
“You spent a lot of time and effort liaising with investors on your crowdfunding campaign so once the money is in the bag, it’s back to business as before, right? Surely as a private company ‘investor relations’ doesn’t really apply, at least not in the way it would if you were a public company? Wrong.
“People who have invested in your company have a right to know how their money is being nurtured and have a vested interest in seeing it being well managed. What is more this year, the industry is expecting to see an increase in Series B investment opportunities and often it is existing investors who will go on to invest in the next round. Building your credibility with them from the start will go a long way to helping you raise further funds in the future.
“Crowdfunded business can learn so much from the way quoted companies communicate with their investors and so much more can be done beyond sending an annual report to shareholders and enabling A-shareholders to vote at general meetings. By adopting a number of simple strategies you can start to build a solid reputation with your stakeholders as being reliable, transparent and accountable. Ultimately good investor relations is about effective dialogue between your company and your investors – both existing and potential.”
Comstive unveiled a few things organizers need to do at the outset:
Know who your existing and potential investors are. One of the most important elements of effective IR is to manage a database of registered shareholders and investors who have shown an interest but not yet committed. Identify the investors you need to build a direct relationship with and keep their contact details up to date.- Decide what you plan to tell your investors, when and how often. Make it regular, clear, consistent, and part of your business culture.
- Let your investors know the ways you will communicate with them and where they can find additional information: email, social media, via your website or events.
Comstivethen stated where to start:
- Direct communication. Many private companies appear to rely on media relations and press coverage to do their IR for them. While this is very effective at getting your message out there, it may not be seen by all your investors and your message cannot always be controlled fully. If you are sending out a press release already, consider repurposing this into an investor focused email or a blog update. News needs to be shared as widely as possible and your investors should be top at the top of that list, otherwise you risk losing their interest. But make it meaningful – too much ‘puff’ can have a negative effect.
- Release a newsletter. This is a great way of wrapping up news if you haven’t had any major news announcement. Some companies prefer to do this regularly, either on a quarterly or half year basis.
- Issue an Annual Review. After your year-end, issue a financial and operational review statement (it can even be issued to press). This is more than just sending your annual accounts and reports. Make your accounts accessible and explain any highlights. An annual review is an opportunity to talk about what you have achieved, where you are in your plan and showcase some of your products, services and initiatives. Also look to the future and let your investors know what your prospects are for the year ahead. But make sure it is balanced. If you have any major risks or have failed to reach a milestone explain why and what you are doing about it. Private companies often shy away from this, but in fact it reaffirms your credibility.
- Make the most of your AGM. Consider making your AGM an event. Invite your investors to attend and make a presentation on your progress and plans. This is a fantastic opportunity to meet with them and get feedback.
- Have a dedicated investor section on your website. This doesn’t have to be overly complicated and you can even password protect it. But as a general rule, include details of your ownership structure, Board members, FAQs, details of the contact in charge of IR, investor documents, significant news, any presentations you may have done and up-coming events. You may have this spread across your website already, but by having the information that is relevant to investors in one place communicates the importance you place on them.
She then added:
“Existing shareholders can be extremely useful in making introductions to new investors and facilitating business connections. They can also have insight into an area of your business and are often willing to share their knowledge and offer advice. By noting theirquestions you can learn what sort of information they are looking for and how to refine your pitch for future funding rounds. So don’t keep your investors in the dark. As part-owners of yourbusiness you have a moral duty to keep them informed and they may well be critical to your future growth.”
