DealFlow Events has been organizing topical conference events for the institutional financial community for 20 years. Its latest symposium, The Reg A Conference 2023, included in-depth discussion of international opportunities as well as taking the Reg A offering straight to the Nasdaq or OTC markets – invaluable information for those who follow microcap stocks and small cap companies interested in a public offering.
This article recapping conference highlights is fifth in a series.
Targeted Advertising: How to Use Data to Reach the Right Reg-A Investors
A company that utilizes the available digital tools on hand for efficient and widespread crowdfunding campaigns in an intelligent fashion is one that will afford itself a position to make repeated trips to the well of additional rounds of financing. Rayton Solar, which makes solar panel wafers, is one such company.
Rayton has had four campaigns to date: one Reg-A and three Reg CF offerings, which can raise $5 million every 12 months.
Rayton CEO Andrew Yakub, joined by his marketing team of Irene Hyder, Chief Marketing Officer of One 9 Strategy, and Jason Fishman, CEO of Digital Niche Agency, spoke at DealFlow Events Reg A Conference 2023.
The trio’s fireside chat stressed the importance of advertising to make Reg A successful due to heavy reliance on digital marketing for investor traffic. They highlighted these points:
- Digital tech allows creation of customized marketing for a campaign via demographic data analysis.
- Only 10% of Reg-A and Reg CF offerings at present are making enough from their advertising to profit.
- A “lookalike” audience is one that matches shared traits and preferences for a particular demographic via social media.
- They recommend utilizing 4-6 audiences in order to have measurable metrics.
- They recommend shooting selfie videos for a campaign to make the company face more relatable.
- Warning: Treat the audience as if it is smart; don’t assume it is of lower intelligence.
When analyzing results, the comparative ease of a digital marketing campaign vs. a physical one becomes astronomically cheaper and much quicker to tweak, especially if the campaign is to be executed in stages. As marketing is, by design, a volume numbers game, a savvy digital campaign is able to rapidly generate those numbers in a short period of time. Some of the more successful campaigns served to offer these benchmarks and insights:
- A 3X return is mediocre; an 8-10x return is considered good-to-very-good on a campaign. One can do a rolling close on a set bi-weekly schedule, for example.
- The average Reg CF investment is $1,000. It thus needs 50,000 investor views of a campaign for a $1 million raise.
- The average Reg A+ investment is $2,200. An offering needs a minimum $7.5 million budget for a $75 million raise.
- $5,000/month on Facebook is a good testing ground.
- 10-20% of a total raise can often be attained in the final week.
- When reviewing analytics and pixel data, ads usually need to be seen 7x on average by a prospective investor before he or she will make the investment.
- One can put pixel data tracking on a video, but not necessarily on a 3rd party website.
From Ring to Raise: Leveraging an Investor Outreach Desk to Skyrocket Your Capital Campaign
While digital marketing campaigns are unequivocally invaluable in building a community and prospective investor base, the investor relations, or IR component, is no less important, and may often be the make or break factor in closing many investors who are willing to invest but are sitting on the fence due to specific questions or individual financial situations that require direct person-to-person assistance, rather than a FAQ page on a website.
Speaking at the Reg A Conference 2023, Ethan Karayannopoulos, Investor Relations Manager of Public Yield Capital, and Manuj Grover, an advisor to Public Yield Capital, gave an entertaining and informative presentation about the IR desk’s responsibilities, functions, and roles in the outreach portion of a campaign during the capital raise process. They also covered the requirements regarding compliant communications and compared the costs of contracting a third party investor outreach firm vs. handling IR in-house.
Equating a $1,000 Reg A investment with a Louis Vuitton bag, they emphasized that a company’s IR desk should have comparable customer service. They added the importance of creating vibrant advertising content, info, and delivering service to get investors to bite in a crowdfunding raise.
On the receiving end, consistent feedback is needed in order to tweak the campaign message, protocols, demographic IDs, and other criteria.
When an investor is converted, another person to actually answer the phone is key. The statistics have shown that a live person on the phone resulted in these benefits:
- 15% higher engagement
- 36% media spend reduction
- 17% increased conversion to investment
- +$722K conversion rate.