Investor Relations – Best practices

Investor relation is like a marriage and not a one-night stand.

The relationship requires:

• Efforts from both the partners
• Patience over a long period of time
• Consistency in actions

5C Principal for effective Investor Relations

• Commitment - Commitment from the founders is essential to establish the ‘right’ culture of communication throughout the company.
• Consistency - Communicate in bad times as well as in good times. Consistency enhances effectiveness and reinforce credibility.
• Credibility - Authoritative spokesperson for the company must engage in investor relations.
• Clarity - Messages need to be both precise yet cover necessary details.
• Conduit - Effective investor relations is about two-way communication: both speaking and listening.

It is observed, many a times,  that prior to the investment, the founder displays the best of the efforts towards the investor relations but with  time on receipt of the investments, the communication frequency  goes south . Why ?

Just like a marriage, striking a balance between the two is the essence to a productive and an amicable long-term relationship.

Similarly, investors not always consider themselves as just equity owners, they consider themselves more – “Co-business owners” and the expectations must be set in place before the investment and the founders should onboard the investors only if they believe they can meet the expectation of the relationship.

Having said so, practices a founder can code in their and the organization’s DNA to maintain the investor relations over the lifetime of the business are :

• Regular updates on both positive and negative news and trends impacting the business. The best companies and founders ensure a great job providing balanced information.
• Sharing monthly MIS
• Conduct informative calls for sharing quarterly reports.
• Share the metrices  that determine the health of the business and allow the investment community to gauge the company’s progress.
• Be open to follow-up questions and be prompt to respond to the satisfaction of the investment community.
• Communicate strategic changes or initiatives.
• Annually share reports and presentations including:
• Key financial highlights and strategic initiatives
• Letter to shareholders
• Financial statements
• Auditor’s report
• Compliance reports

These practices instill trust, confidence and proactive support in the times of tide.

Confident, content and informed investors may provide:

• Business support
• Fund raise connect
• Liquidity

And most importantly - trust.

“Communication works for those who work at it.” - John Powell