By Joy Schoffler, Leverage PR
Most people have heard the saying that perception is reality, and in the microcap world, where the C-suite is constantly looking to increase performance and push value, this is especially true. While the use of investor relations firms is common practice in the microcap world, the engagement of financially savvy public relations firms to increase a company’s overall brand awareness is occurring on a much smaller scale, giving those who change the way they are perceived in the market a much nicer reality.
Investor relations and public relations are often used interchangeably, and while there are some similarities, there are key differences as well. Broadly speaking, investor relations is a branch of public relations, where public relations is an umbrella term for any and all sorts of communication between a brand and the public, including investors.
For many, investor relations evokes visions of road shows, shareholder meetings and investor calls, all activities geared toward increasing, stock volume, liquidity and share price. However, the picture of how public relations can affect investors’ perception remains unclear for many. Public relations include all public-facing communications, which includes media relations, analyst outreach, crisis communication, reputation management, newsletters and other external communications. It is the practice of controlling a brand’s message and overall perception in the public eye—because if you don’t control it, someone else will.
On the surface it may appear like just one more line item on a budget, however, if done well a good public relations strategy can make everything from sales to employee communication to raising capital much easier –without ever stepping over the bounds of generally soliciting.
Large consumer-facing companies by nature tend to merge investor relations and public relations well. They marry regular shareholder communication and analyst outreach with content marketing, high-value media placements and other brand-building items that give investors the feeling of stability and security they need to be confident in the company. In large companies, investor relations tends to be a division of public relations, working hand-in-hand with the overall public relations strategy, directing sensitive messaging, crisis communication, and even evaluating the overall appearance of leaders when health or other sensitive issues arise to ensure the company is putting its best foot forward.
Microcap companies, not under the same intense scrutiny as a Fortune 1000 company, tend to benefit just as much—if not more—from well-executed public relations campaigns. Since the Great Recession, investors are eyeing their holdings and investment advisors with increased skepticism. Stability, growth and market leadership are items every company needs to be concerned with, especially in the microcap world.
Good Public Relations Strengthens Investor Relations Efforts
Learning why and how to effectively combine investor relations and public relations is something I learned during the first half of my career working on the buy side of a private equity firm, which grew from four to75 employees in one and a half years, making the Inc. list twice. Sourcing high-quality commercial real estate assets in a competitive market and educating investors on new acquisitions as a young private equity firm was often an uphill battle. I found, however, when the firm secured media coverage, my job got a whole lot easier. At that time general solicitation was illegal, we had to promote with caution ensuring high quality content that did not cross the line into investment promotion. Through the process of using public relations in the microcap world a few key lessons about the power of the pen emerged:
- Digital Presence Enhancement. There are few items less critical for a company than its digital presence when raising capital. With many investors starting the due diligence process with a good “old-fashioned” Google search, the quantity and quality of search results matter. Do you look like the leader in your industry? Is your C-suite out on top of current news and trending topics for the industry? Are the investment publications talking about you? Do you look like you’re running a hot company? Perception is reality—what is the perception when Googling your company and CEO?
- Lead Generation. The private equity world is a competitive business, in addition to fighting for investor dollars, deal flow is also up for grabs. An article placed in the right publication with the right message can direct targeted traffic to a business—even if it is not planning on utilizing the new general solicitation laws to market securities offerings.
- Investor Marketing Materials. During the capital raising process, one of the most challenging times is after the executive summary and other investment documents have been sent to prospective investors. If you don’t go for the close, you won’t raise the capital. At the same time, pushing too hard can give off the appearance of desperation. Having a stream of high-quality press mentions that weave in market data and other facts that are interesting to a company’s stakeholders arms the investor relations team with tools that allow them to do a strong outreach to prospective investors.
- Winning the Mind Game. There is a whole psychology to the investor relations process, and making the wrong choice has ramifications that go way beyond loss of capital. No one wants to make a poor decision, especially not one that involves loss of their nest egg. While all good press coverage in the world will not fix past fraud, poor management and over-aggressive projections, it will help good companies with a good track record and realistic projections look like a more serious player.
In the end, public relations is simply a conduit to reach, communicate and engage with a company’s target audience. It is a process that identifies what is important to a company’s audience, develops messages that speak to these targets and delivers these messages through a variety of media channels. In this way, a company of any size can have the tools to improve its perception, and therefore its reality.
About the Author
Joy Schoffler is the award-winning founder and principal of Leverage PR, a strategic communications firm specializing in the finance and technology industries. She is a nationally recognized author and speaker on the topics of investor relations and marketing, public relations strategies and investment crowd funding. Prior to launching Leverage PR, Joy consulted and worked with a number of growth-phase firms, including serving as director of acquisitions for The PPA Group, an award-winning investment firm.
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