The OTC Markets group recently completed a survey of CEOs in Small-Cap space. The results of the survey went a long way to highlight the challenges faced by the Management of Small Cap companies.
The Key findings boil down to the fact that CEOs want to: increase their share prices, increase liquidity of their stock and raise capital.
I think the most interesting aspect of the survey is that all of the above “challenges” can be attacked through an aggressive Investor Relations commitment, but the survey indicated that 73% of Companies handle IR themselves between the CFO and CEO, and they allocate only 11% of their time to IR.
The survey further indicates that management spends 17% of their time raising capital.
We would venture to say that if management made some changes to their allocation of resources most of these challenges could be addressed more efficiently.
- IR should have a dedicated resource at the Company level – either in-house or external. Leaving that responsibility for the CEO and CFO is a guarantee that not enough time will be spent on IR as other responsibilities have the tendency to take priority.
BUT – the CEO/CFO needs to continue to contribute time to the effort. An IR person can make sure that something is being done every day to move the agenda forward on an IR basis, but will need Management involvement to make sure the goals are achieved.
- Focusing on IR and focusing on retail investors will help create liquidity that will make the capital raising process easier – and less dilutive.
Spending time talking to institutions about capital raising when you’re struggling for liquidity can be putting the cart before the horse.
In Conclusion – we believe that putting a concrete – sustained – and creative Investor Relations Campaign together can solve many of the challenges faced by a Small Cap CEO.