Investor Targeting and Outreach
Targeted investor outreach is widely recognized as the cornerstone of effective investor relations (IR) strategy. For public companies, especially those in the micro-cap and small-cap sectors, this approach is crucial. By focusing on investors who are aligned with your company’s goals and sector, you increase the likelihood of securing long-term shareholders and boosting funding opportunities. Simply put, if you’re pitching your company’s stock to investors who don’t understand or aren’t interested in your industry, or to funds that don’t invest in companies of your market cap or sector, your efforts are likely to be in vain. This makes targeting essential—especially when the universe of potential investors is relatively small.
Here are five actionable steps to enhance your investor targeting and outreach, ensuring the maximum impact:
- Identify Your Peer Companies
Begin by identifying other companies in your industry that share similarities with your business. Focus on the core problem your company is solving. For example, a client of ours developed a novel approach to upcycling plastic waste using chemolysis. Although no direct competitors exist for this specific approach, other companies using thermolysis and pyrolysis to tackle the same problem serve as relevant peers. Identify these companies, particularly those that are publicly traded, to create a solid foundation for your investor targeting.
- Categorize Your Peer Companies
Once you’ve identified your peer companies, sort them by market capitalization and the technological or industry-specific approach they employ. This step helps you organize a targeted list of prospective investors based on the characteristics of companies similar to yours. With this sorted list, you can start building an investor universe tailored to your company’s specific needs.
- Build a Comprehensive Investor List
Next, gather data to create a comprehensive but targeted investor list. Start with the following sources:
- Peer Ownership: Identify institutions that hold shares in your peer companies. For U.S.-listed companies, this information is available through 13F filings with the SEC, which can be accessed via EDGAR or tools like Fintel.io. Unfortunately, in Canada, the process is more complex due to different reporting requirements, but focusing on the top small-cap institutional investors like Canaccord, PI Financial, Mackie, Eight Capital, and Haywood Securities can yield results.
- Canadian Institutional Investors: Canada has fewer institutional investors active in the small-cap space. However, by identifying and targeting key players in your sector, you can hone in on those most likely to invest.
- Third-Party Databases: While investor databases can be useful, they often require extensive filtering. If you choose to purchase a list, be prepared to refine it significantly.
- Banking Partners: If you have established banking relationships, they can often provide valuable insights and lists of potential investors.
- Sort and Rank Your Investors
After compiling your investor list, it’s time to sort and rank each contact. Begin by categorizing investors into “hot,” “medium,” and “cold” prospects, aiming to develop a top 10 list of the most promising targets. Research each contact to determine their investment focus, past interactions, and alignment with your company. Prioritize contacts you or your colleagues have previously engaged with and those identified by your banking partners.
This sorting process is time-consuming but crucial. When done correctly, it can significantly improve investor engagement and, ultimately, your company’s stock performance.
- Implement Your Investor Outreach Strategy
For outreach, a combination of email and phone contact tends to be most effective. Begin with an email introduction, allowing potential investors to respond at their convenience. If you don’t receive a response after two emails, follow up with a phone call. Repeat this process quarterly to maintain a presence without being overly aggressive.
Keep your target list dynamic, adjusting it as you gather more information about each investor’s needs and interests. Remember, investor outreach is about building relationships over time, not just securing immediate investments.
Conversion Timeline
Converting an investor rarely happens after the first meeting. It typically requires multiple touchpoints over six to twelve months or longer. The key is to consistently engage with a targeted group of qualified investors, nurturing these relationships over time and aiming for annual conversions.
How Cyan Can Help
At Cyan, we’ve cultivated a proprietary global database of both retail and institutional investor contacts, with a particular focus on North America. Our team can assist you in developing tailored targeting strategies, creating custom investor lists, and executing extensive outreach efforts. Whether you need more individual investor meetings or a non-deal roadshow focused on North America, we can help you connect with the right investors. Contact us using the form below to set up a meeting with one of our team members.