Small-cap companies trying to raise more capital or get a listing on the OTC markets may find it’s a Do It Yourself proposition. Few, if any, investment banks are interested in deals with a small market cap. There are boutique banks that may sign on for a microcap IPO, but a company must still tell a compelling story to secure investment.
As the philosophy goes, if you want to bring on new investors, don’t stop investor outreach. Many microcap companies overlook the importance of a well-crafted investor outreach strategy. This ensures the company’s communications maintain a consistent tone and continue to circulate. It can also build anticipation for corporate presentations targeting new investors.
This is among the many topics slated for in-depth discussion at The Microcap Conference 2024, set for Jan. 30-Feb. 1 at Caesars Atlantic City Hotel and Casino. This three-day conference presented by DealFlow Events features technical programming designed for microcap investors and a presenting company track for pitching and socializing. The conference promises unparalleled networking opportunities in a luxurious venue in the heart of one of the world’s great entertainment destinations.
As part of the investor outreach strategy, the first question a company must answer before staging any float is whether it is ready to go public.
OTC Markets Group conducted a study evaluating the performance of all IPOs that went to the Nasdaq CM and NYSE AMEX markets in 2022. They reviewed 91 deals. The average market cap of this group of companies was $213 million the day after the offering. 28 days post the offering, the average was $102 million, and the current average sits at $56 million. This analysis included traditional IPOs as well as IPOs by issuers that uplisted from OTC Markets with the key findings as of August 2023.
Strategies for developing presentations or supplementing them to connect with investors:
- Develop a company website featuring an investor relations section and update as necessary.
- Issue regular press releases.
- Maintain an active social media presence on platforms such as X (formerly Twitter), LinkedIn, and Facebook.
- Host conference calls and webinars for ongoing engagement with current and potential investors.
- Participate in industry tradeshows.
- Always produce an annual report, whether or not the company has a stock listing. Provide as much information as possible.
- Distribute email newsletters covering the company’s achievements.
- Create a targeted shareholder database.
- Reach out to individual investors and investment firms.
- Utilize video production to present the company’s story visually.
A compelling presentation will excite investors if they see the potential of the company. What pain points does the business resolve for consumers? Is the solution unique (i.e. no competition)? How does the company differentiate itself to stand out in the market? Is there a credible plan for achieving growth and profitability?
All of these questions can be distilled into the core issue on the minds of most investors. It’s what they really want to know: Why should anyone care about or do business with this company?
A presentation that convincingly and enthusiastically answers that question will be more likely to spark investment than any other nuggets of information a company could provide.
Other avenues for investor outreach outside the formal setting of meetings and presentations include interactive formats such as podcasts (depending on the company’s capacity to devote resources toward podcasting) and event invitations.
Engaging with stock analysts and the media before and after an investor presentation is paramount for microcap companies, as they are both small and unique. It is essential to develop and convey the corporate brand in a way that resonates with the target audience. Building awareness and exposure is crucial for the growth of a microcap firm, and this means finding a language that connects with the intended audience.
In other words, be relatable.
This is vital to establish trust and credibility with investors. Company executives should participate in analyst conferences and briefings, and make themselves available to business reporters. By providing accurate and timely information, this helps ensure the company’s narrative is portrayed accurately and fairly.
Transparency is the cornerstone of building and maintaining a good reputation with investors. This requires trust, so it is crucial to be honest when dealing both with investors and the media. Consistency in PR communications helps the brand stay in the minds of the audience.
Producing investor presentations is a key tool for communicating with investors and highlighting the company’s strengths and achievements. These presentations should be clear, concise, and offer an overview of both the business and latest financial performance.
A note on slide presentations:
If you are going to share a slide presentation with potential investors, either take some time to master the software for creating the slide deck using PowerPoint or a similar design tool, or pay an experienced designer to create the presentation. Most investors, if they are honest, will say they dread the thought of sitting through yet another slide deck, mainly because over the years these presentations have become mind-numbingly dull. Yet apps like PowerPoint are capable of building stunning presentations that feature animated transitions, video clips with audio, running narration, special effects and much more. The problem is, these features are seldom used so the slide presentations remain static and uninspiring.
Rehearsing the presentation promotes confidence and reduces the risk of technical problems. As obvious as it may seem, too many investor pitches turn into disaster because the presenter didn’t test the equipment before the start of the program or forgot the A/V cable needed to connect a laptop to the projector the audience will see. A dress rehearsal can only help the presentation be a success.
Additional presentation tools and techniques for attracting and keeping investors:
Fact sheets and corporate profiles
These provide snapshots of a company’s business and should be regularly updated to maintain their usefulness. All documents should be accurate and easily found on the investor relations website. Hard copies should be available to distribute at investor gatherings.
Annual shareholder meetings
Investors need a platform for asking questions and expressing concerns. It’s essential to ensure these meetings are well-planned and informative, fostering an environment where shareholders can learn more about the company. Build in time for answering questions.
Annual meetings also provide an opportunity for the Investor Relations Officer to connect with shareholders and discuss the company’s performance and future plans. Consistent communication with shareholders builds trust and credibility.
A robust media relations program
This not only helps the business focus on the right exposure for its message but also helps attract investors, consumers, and potential business partners. Effective PR can expand a customer base beyond simply issuing press releases. A robust online media relations program is always working to promote the company. That attracts investor attention.
The most compelling message is worthless if it doesn’t reach the appropriate audience. Attracting the right investors for a firm is crucial, and they typically don’t come knocking on the door. Proactive efforts are essential in building relationships with potential investors.
These key points are fundamental to any microcap company’s IR strategy. Following these guidelines can help boost investment while fostering trust in the company. That’s a win for everyone.
Join us at The Microcap Conference 2024 for insightful discussion and after-hours entertainment that will appeal to executives of small-cap companies and investors alike.
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Tickets to the inaugural Microcap Conference 2024 are going fast. Reserve your seat now for three days of unsurpassed networking and technical discussions of the microcap sector with some of the best names in the business – institutional investors, finance-focused law firms, venture and private equity fund managers, deal advisors, PIPE funds, brokerage firms, investor relations professionals, accredited retail investors and many more. The conference schedule is also packed with entertainment and exciting activities set against the backdrop of Atlantic City’s bright lights.
