As an institutional sales person covering the Boston region for over 15 years, I have sat through countless non-deal road show meetings with investors. The best-managed and most insightful meetings I witnessed were with a small-cap growth portfolio manager who ran over $4 billion in mutual fund assets.
While past posts on non-deal road shows have addressed their benefits, and on how to make them effective for the company seeking investment, this time I would like to consider the long-term investor’s perspective. What are their expectations and what do they hope to accomplish through these meetings? I have summoned the views of the previously mentioned PM and would like to share them with you:
- “Be passionate.” Investors want to see a management team that is passionate about its business and believes in the mission of their company. If you are addressing an unmet medical need, developing next-generation therapeutics, or trying to improve the healthcare system through technology and service, show that you are an advocate for the patient, the doctor, and the healthcare professionals on the front lines. Provide examples of advocacy groups and medical associations with whom you are affiliated or partnered.
- “Be honest about your total addressable market (TAM) and do not dismiss your competition.” Be able to clearly define your TAM using both empirical data and qualitative analysis. Be honest as you focus on your competitive position within that market and elaborate on your differentiation, but do it without antagonizing the competition. Remember, the investor will leave the meeting and make multiple doctor calls or channel checks in their due diligence process. Make sure that the feedback they receive is consistent with your message.
- “Make it a strategic conversation.” You want shareholders to be with you for the long haul, so it is important to lay out your three- and five-year plans. This is a two-way conversation so leverage the knowledge, expertise and experience of the investor and receive tactical feedback regarding your vision. Over time, meetings with the same investor will multiply and you will always be able to refer to the context and strategy discussed in that initial meeting. And that point leads me to…
- “Establish a long term relationship.” As you execute your long-term vision you will want your investors to be your long-term partners. In many instances, you will need multiple capital raises to fulfill that vision and these strong relationships will be the best sources for that capital. Do not get frustrated if you have multiple meetings with an investor who never becomes a shareholder. If they care to meet, they care about the story and might be waiting for their opportune time to pull the trigger.
Lastly, but certainly just as important:
- “Do not focus on the price of your stock.” It is a red flag to most investors to discuss the valuation of your shares or why you think it is a great buy at certain levels. Do not promote the price of your shares. This might show that you are in it for the wrong reasons. Execute effectively and to the best of your ability, and let the share price take care of itself.
To quote this PM: “Nothing is better as a growth investor than to have an investment in a company become a partnership based on honesty and vision through good times and bad — where you can look back after 10 years and say ‘that was one hell of a ride.’”
At Westwicke Partners, we have many relationships with investors who think this way and we help get companies like yours in front of them. Please reach out if you would like to discuss shareholder targeting strategies.