This week, Crowdcube co-founder and CEO, Darren Westlake, revealed his very own entrepreneurs guide to looking after investors.
“The people who have invested in a company have a right to know how their money is being spent and have a vested interest in seeing it being well managed. Not only that, many invest because they want to be part of a company’s future, they believe in it and want to be part of its journey. Keeping them updated is an important part of that ongoing relationship.”
Darren also explained that he and the Crowdcube team are expecting an increase in Series B investment opportunities for crowdfunding investors. He noted that building a company’s credibility with these individuals from the start can go a long way in helping raise additional funds later on down the line.
“Crowdfunded business can learn a lot from the way that 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. A good investor relations strategy is about effective and regular dialogue between a company and its investors – both existing and potential.”
Westlake then listed five key ways to keeping investors in the loop, which are seen below.
- Communicate directly: “Many smaller companies rely on the media to do their investor relations for them. While effective at getting your message out there, it may not be seen by all of your investors, and the messages cannot always be controlled fully. If you are sending out a press release, think about repurposing it into an investor-focused update, for example. Company news should be shared as widely as possible and investors should be top of that list.”
- Issue an annual review: “After year-end, send an update on the company’s financial performance. This is more than just sending your annual accounts and reports. Make the accounts accessible and explain the highlights. This is an opportunity to talk about what’s been achieved and showcase some of your products, services and initiatives. Also let investors know what your prospects are for the year ahead. But make sure it is balanced.”
- Use your AGM: “Consider making your annual general meeting (AGM) an event – invite investors to attend and present on the company’s progress and plans. You will also get to meet with them and get feedback.”
- Dedicated investor section on the website: “Include details of the company’s ownership structure, board members, FAQs, details of the contact in charge of managing investor relations, investor documents, news, presentations and upcoming events. Having information that’s relevant to investors in one place shows the importance a company places on them.”
- Leverage investors: “Existing shareholders can be the best (and fastest) way to make introductions to potential new investors and new business connections. They are also often happy to share their knowledge and experience, becoming mentors or advisors. By talking to them, you can learn what sort of information they are looking for and how to refine your business pitch for future funding rounds.”But as well as being potential customers, your investors can be your biggest asset – they have a vested interest in your company and kept informed and engaged with the business, they are more likely to spread the word about what you are trying to achieve. Plus, as part owners of the business, you have a duty to keep them informed of the way it is performing – they may well be critical to your future growth and success.”