Taking a company public is one of the most exciting milestones in any entrepreneur’s career. This company you’ve helped build, that you wrote the investment thesis for, spent countless hours with a multitude of third-party advisors on the capital raise process has finally reached a level only a few founders ever achieve.
Yet, after the confetti has fallen and your stock is now humming along, the real challenge begins. You’re tasked with the constant battle of maintaining investor interest -- keeping both institutional and retail investors apprised of your company’s evolving business model in real-time -- and measuring your investor relations program’s success for your entire management team. Also, the investor relation function is now becoming more strategic in the organization, as they are now working closely on M&A, market analysis and corporate governance, which is a new and exciting pattern for this role. Still, it’s a lot, and chances are you working with moderate support, but with some creativity and dedication you can come out of the post-IPO gate with guns blazing.
Finding time to appease investors
Meeting with potential investors was already an exhaustive process when your company was private. Now you’re officially public your world has become a great deal more difficult. For example, in North America, public companies typically conduct between 150 and 200 investor meetings and reach approximately 100 to 150 different institutions per year. As these numbers show, it can be challenging for an entrepreneur and her management team to carve out time in their schedules for investor roadshows or one-off investor meetings.
Yet, it is imperative to do so. These investors need to see the face of your company, who’s at the helm and understand the vision they’re executing on.
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Unfortunately, an email or phone call isn’t going to cut it, especially in these early, introductory meetings with potential investors. There needs to be a little more effort. If you or another senior leader is going to be traveling to a regional office, conference or for media interviews, carve out time on the calendar to meet with an investor or two to shake hands at the very least and show face. It’s important.
Video conferences (or user webcasting) are another option for keeping up with those relationships, as it fits nicely between in-person and email. (Keep in mind, when you first are raising funds from investors, this strategy isn't going to do the trick, as they will need to meet management face-to-face)
Social media is another good communication tool, particularly if you have a large swath of retail investors and buy-side analysts who follow your company. We have seen a real growth -- a doubling in the last two years -- of companies formulating a policy around social media. Whether or not social media adds substantial value is still uncertain. But it’s still another channel to consider getting your investor message through and also monitor for online chatter on your company.
Measuring your program’s effectiveness
At the end of the year, how do you judge if your investor relations program was effective? Unfortunately, there is no easy answer but I do have a few pointers.
Your company should have clear objectives from the get-go of what you want to achieve in broadening your investor base and retaining the current ones. You can then circle back to these objectives, but don’t wait until the fourth quarter or when you’re in front of your board -- you need to measure regularly.
For example, you shouldn’t measure your effectiveness by your stock price; there are too many other external factors that affect it during the year. Rather your best measurement is found from gathering feedback from the buy- and sell-side analysts, your senior management team and what the general market says about you (i.e. retail investors, the media and general public.).
If you have an Investor Relations department, you need to ask how they’re doing as an IR professional and what these aforementioned parties think of them as a company or an investment opportunity. (If it’s just yourself, it still applies). That’s critical.
Another layer is about how the company is doing with telling your business and investment story. Are you explaining this to your audience clearly? Is there more information you should be providing, better background, etc.?
Most importantly, constantly monitor the reception of your investor message. It can be a combination of formal and informal check-ins: send emails, make phone calls, tap social media and other targeting analytics and arrange quick face-to-face meetings with your constituents. It makes no difference on the approach, it just needs to be constant, especially in these early days of your company’s life as a publicly-traded entity.
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