Creating An Investor Awareness Campaign For Regulation A Crowdfunding & Small Cap Companies

Over the past 365 days the Securities and Exchange Commission has enacted Regulation A and Regulation A+. These regulations change the rules on how startup companies and businesses can raise capital via crowdfunding and online. The interesting thing about the new regulations for crowdfunding is that they are very similar to promoting and funding a smaller public company such as a penny stock, micro-cap company or small cap stock.

After my time at Merrill Lynch and the New York Stock Exchange I worked with a boutique investor relations firm being retained through Cervitude IR. In that time, I had a mentor and wall street veteran who described many of the OTC companies and NASDAQ penny stocks as “story stocks”. What he meant was that many of these companies had limited operating histories and had a better story to tell than they had financials. When the company issued a press release it was more pertinent (and definitely more interesting) to discuss the company’s management or the company’s future game plan than it was to discuss their operating cash flow or assets on their balance sheets (since many of them had none). This is mainly because there were limited operations in the company and the prospects, or story of the company, was more enticing and then the actual financial statements that the company released.

An investor awareness campaign is usually sought out by a company because they are looking to raise funds from investors. This means that they do not have funds or that they need more funds. Either way they are trying to entice prospective investors to buy into their companies. Startups and publicly traded smaller companies looking to achieve investor awareness and leverage that awareness to convert the readers or viewers into potential stockholders or investors should be trying to tell their story succinctly to potential investors. This includes penny stock promotions and what is sometimes called accredited investor outreach.  In comes the story….

The best way to attract potential investors is to tell your story in a fashion that relates to them. Regardless of whether you are a penny stock, micro-cap company, small cap stock or startup, the outline should be the same. A smart investor relations promotion or awareness campaign will tell your reader or viewer 6 things:

  • Who: This includes the management and name of the company in the investor relations or investor awareness campaign (this can be done in one press release or vide OR over a series of press distributions)….
  • What: What is it that the company is doing or plans to do…..
  • Where: Where is the company located or where is the company planning on competing…..
  • When: When is the stated event going to happen or when did the event happen……
  • Why: Why is this important to the reader?….
  • How: How is the company planning on capitalizing on the event or how is the company planning to proceed?….

All of these things will lead the reader or viewer to have a full picture of the story the company is trying to tell via their investor relations campaign or investor awareness campaign.

Regulation A or A+ crowdfunding efforts as well as penny stock and small cap companies should be aware that going public (via a reverse merger or listing OTC) or setting up a crowdfunding campaign on a crowdfunding website does not automatically bring in investors. Rather, this is the first step and investors must be notified that you are now public (or raising funds via a crowdfunding campaign).

Thinking that investors will come just because you are publicly traded or on a crowdfunding website is just plain WRONG! A strong marketing blitz and promotional efforts are required to bring attention to your story. And this promotion should end up on marketing material that tells an enticing story to prospective investors.

If you need help telling your story to potential investors, contact us today to discuss how we can help.  Contact us by clicking here.

-Nick

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