David Lonsdale is the Founder and CEO of Micro Cap Liquidity LLC, a company dedicated to helping the CEOs of Micro Cap companies achieve optimum liquidity in their company’s stock, facilitating efficient sales of shares due to improved daily trading volumes. www.microcapliquidity.com
The CEO of a Micro Cap company often faces huge challenges in bringing liquidity to the company’s stock. Internally, the board of directors, investors and employees, all want to see the stock appreciate and trading volumes increase. Externally, you look into a dense fog, not really knowing who your investors are or how to reach them; or indeed what message should be delivered. Furthermore, you ARE the CEO of your company. You have customers and distributors to deal with, suppliers and development partners, strategy and cash flow, employee morale and…….you must lead your company. No one said that you were suddenly a guru when it came to developing market liquidity!
Perhaps the biggest mistake that is typically made is after a successful private placement. The company now has cash in the bank and the board tasks the CEO with hiring an Investor Relations Advisory firm on Wall Street to improve the company’s liquidity. Unfortunately, many of these firms are found on the ‘periphery of Wall Street’, and quickly make promises to the CEO of stock appreciation, increased liquidity and introductions to institutional money. The story sounds good, and indeed it should – it has been told many times before. Significant monthly retainers are duly paid, the CEO is whisked around various sources of investment, and………nothing happens. Nine months later, the plug is pulled on wasted money and effort, and it’s hardly a feather in the CEO’s cap!
Let’s be clear, Wall Street and Institutional Money are NOT interested in Micro Cap companies. When an institutional investor has decided to invest in a company they need to invest several million dollars over a period of a month or two, where they never take more than 10-15% of the daily trading volume of the stock. Your company’s stock is trading only a few thousand dollars a day in total! To the institutional investor, your fine company never even makes it onto their radar.
OK, enough. We have defined the problem; what about a solution?
The answer is the Retail Investor. Today, there are over 50 million self-directed retail investors in the US alone. They tend to be younger, aggressive and utilizing all the internet tools available to them to identify investment opportunities. They primarily rely on search engines which lead them to a host of social media platforms for their information. If we can reach and compel just a small portion of this vast community of investors, we will succeed in developing a significant volume of smaller transactions and thus, build liquidity for your company.
So, to start developing this market liquidity, we are going to have to determine how we will communicate with these retail investors. We must understand how to find them, how to reach them and what message will be compelling to them. A Communication and Promotion Strategy must be agreed. It will begin with the content and exactly what message you wish to convey to your audience. Any digital marketing and social media campaign not only requires that your target audience be defined, but that we need to understand who their influencers are, and where they ‘hang out’ on line. What are the forums and who are the thought leaders listened to by these investors? We will craft a precise plan to reach them through channels, custom designed for your company, taking full advantage of the changing digital landscape.
We have a broad range of tools to accomplish this, and while the list is extensive, we will lay out a phased approach which allows us to crawl before we walk and run. You will see no grandiose paneled corridors in this approach, but a rigorous well-thought out and well-executed plan to ensure the right retail investors hear your message and your call to action. The plan will include reaching Bloggers, Analysts, Small Cap ‘rags’, Newspapers and Publications, Social Media (LinkedIn & Twitter), Business Radio, Customers, Distribution Channels, Product Packaging…….. Your company’s message will appear wherever your investors and potential investors ‘search’.
Finally, the only voice that your investors really want to hear is yours; you are the CEO. The message is yours. Micro Cap Liquidity partners with you as a powerful vehicle to make sure your voice and your message are heard by the right people. The result is a much broader awareness of your company by the retail investor community and increased trading in your stock; delivering improved Market Liquidity.