Knut Stålen, CEO in OwnersRoom, has a long career as CFO, working actively with investor relations. He has taken several companies public and been through multiple mergers and acquisitions.
In listed companies, the Investor relation activities are managed by the CEO and the CFO, and they might even have a dedicated Investor relations manager. The reporting and governance are highly regulated and follow standard processes with quarterly reports and investor events.
For private companies, however, these activities are in many cases neither formalized nor prioritized. The investor relation activities come on top of everything else, but neglecting this is a lost opportunity. Building trust, creating engagement and strengthening relations with your investor network can make or break any growth company, and should be considered essential activities for any startup or growth company looking to raise capital in the future.
So, how do you get started with this?
The existing cap table and the overview of new potential investors are cornerstone information for investor relations and is a good place to start.
Knowledge about who owns shares in the company and your shareholder structure is key to a successful investor relations strategy. Shareholder trust and engagement is a necessary and ongoing process, and this starts with creating transparency around the bare minimum; who owns what. As such, not only listed companies should take this seriously, but also private companies should prioritize this. After all, it is difficult for any investor to stay engaged if they don’t even know what they own.
As companies evolve, and more shareholders join, the need to professionalize the ongoing investor relations activities increases. At this point, you should consider creating more transparency regarding documentation and sharing information regularly, as your investors want to be kept in the loop on the overall traction of the company. Setting up a simple template to share with a regular cadence to your shareholders and potential investors will go a long way to both creating trust and keeping your company top-of-mind. This can be as simple as a couple of KPIs and a brief text about the last period, shared every month or quarterly. Even such a small effort makes a huge impact on staying close with your network, ultimately meaning that you are better equipped when the fundraising days come.
Another important factor here is that by staying quiet, you risk losing both the support and contributions of your investor network. These stakeholders are not only good for money, but they can also help you with new contacts and knowledge to bring your company forward and support your path to success. In many cases, these stakeholders are an unutilized resource as they are kept in the dark. Sending regular updates and working actively to engage them will go a long way to fix that.
First of all, there are no tools that can replace what you do every day to win business and build success. Better revenues, increased positive cash flow, satisfied customers, and happy, hardworking employees are always ingredients in a winning recipe. Still, over the life cycle of the company, you usually face some ups and downs. Creating transparency and involving your shareholders and potential investors in how the company evolves, creates trust and in the end support for the journey going forward.
The OwnersRoom platform builds on your cap table with the current shareholders and enables you to invite new possible investors and stakeholders into the “room”. From this core stakeholder overview, you can send regular updates and share documents, segmenting the information through access control. Effective administration with digital signatures and process help when you raise equity is of great assistance. Analytics gives you insight into who receives and who opens your news post, meaning that you can get a better overview of the engagement in your network. Investor relations has never been this easy.
Build trust, create engagement, and raise capital. All in one place.
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