I often encounter micro-cap CEOs who want to increase liquidity and the valuation of their stock. These CEOs tend to think a micro-cap IR (investor relations) firm is their solution. While micro-cap IR firms can be very helpful with crafting and disseminating a micro-cap company’s message, there is no magic overnight solution to liquidity and market valuation.
First off, I am not an IR professional but I have had a lot of experience with micro-cap IR from an investor and consult prospective. In my opinion, the two most important pieces to micro-cap IR success are business progress and communication. If your business is progressing and you do a good job communicating your story (and progress) to shareholders, not only will you gain traction on your own but, you will get much more value from any micro-cap IR firm you choose to engage.
The first piece, business progress, is something the management team of any public company should have a strong handle on. After all, you are in business to build a business! If you worry more about your business growing and less about the market, you are on the right track. For the purpose of this post, I will offer one piece of advice – remember that setbacks are only stepping stones on the path to success. H. Stanley Judd (a little-known author with some fantastic quotes) said;
“Don’t be afraid to fail. Don’t waste energy trying to cover up failure. Learn from your failures and go on to the next challenge. It’s ok to fail. If you’re not failing, you’re not growing.” – H. Stanley Judd
To continue off of Mr. Judd’s quote, you need to HONESTLY communicate with the market regularly (good or bad)! Because micro-caps have little analyst coverage and/or similar information easily available to the public, it’s very important to tell the market what you are trying to do and how you plan to do it. According to the Harvard Business Review “Wall Street Rewards CEOs Who Talk About Their Strategies“.
Below I highlight two general philosophies that I believe are key to the success of any micro-cap IR strategy; (1) treat all shareholders the way you would want to be treated and (2) present yourself professionally. I’ve also included links to a few free webinars that should set you on the path to micro-cap IR success.
Treat All Shareholders the Way You Would Want to Be Treated – The age old adage, “treat others the way you want to be treated”, definitely applies to micro-cap IR. Imagine if you were a shareholder in a public company (who bought stock in the open market), or better yet, a large shareholder who invested thousands, hundreds of thousands, or millions of dollars in a company’s public stock (the exact type of investor many mico-cap CEOs want to attract). Wouldn’t you want to be updated regularly on the business, good or bad? Well, if you want to attract investors (especially large and loyal investors) you need to treat all shareholders the way you would want to be treated! Update them, respond to their queries, consider their position when making decisions, make them feel like they are part of the team, etc.
As an added bonus, you may find that treating shareholders well will convert those shareholders into your biggest supporters. If you do it right, not only will they invest in your stock but they will also work to help you succeed! You will find that, if you treat shareholders well, they will become your own grass roots IR and sales “militia”. Best part is, this grass roots team will be better than free because they will be buying your stock while they help the business in other ways!
Present Yourself Professionally – Do you have a professional website, updated social media accounts, a strong physical presence, easy to find contact info (that works!), and an IR website? Are you responsive to inquiries, do you proof read/format your press releases properly, do you make updated investor information (presentations, news, filings, etc.) easy to find, do you regularly update investors through conference calls or press releases, does your story flow from press release to press release? If you want the market to believe your company is the “real deal”, and thus buy your stock, the answer to all of the above questions should be a big YES!
Technical Tips – While the above tips are more general philosophy, there is also a lot of technical work that goes into IR communication. Below are two links to free webinars that will guide you through building a strong micro-cap IR program (before you start paying for outside help).
Small-Cap Webinar Series from Vintage (a division of PR Newswire): “With first-hand “how-to” advice expertly structured for small and micro-cap companies, this six-part series will walk listeners through the steps needed to transparently and effectively communicate with current shareholders and prospective investors.”
Check out the entire free webinar series from Vintage HERE.
IR Best Practices for Entrepreneurial & Development Stage Companies from OTC Markets: “Please join John Heilshorn, Partner at the investor relations firm LHA, and Bob Power, Vice President of Corporate Services at OTC Markets Group, for a webinar on how to develop a successful investor relations program for small-cap, growth companies. Listen and share your questions as we discuss best practices to engage shareholders.”
Check out the free webinar from OTC Markets HERE.
There you have it. In my opinion, those are the micro-cap IR basics. Build a real business and communicate with investors and you will have a foundation that any micro-cap IR firm can build off to exponentially increase your liquidity and valuation (if you still even need outside help when your done).
About Ben Kotch:
Ben Kotch is a managing director and investment committee member at Acquis Capital, LLC, a private investment firm that specializes in acquisition funding. He has extensive experience with both private and public companies. Ben graduated with an economics degree from Bentley University where he concentrated in entrepreneurship and law.
For more, please follow on Twitter.
NOTE: This blog and all of its contents (the “Site”) are for entertainment purposes only. The views expressed are solely those of the author. This Site should not be construed as an offer to buy or sell any securities or as an offer to transact. Nothing on this Site should be considered financial, legal, or tax advice.