Last week, my business partner, Jason Hilton, and I went to the See Thru Equity and MarcumMicrocap Investor Conferences in New York City. There were some great things, some not so great things, and some downright ugly things.
At the See Thru Equity Conference there was an excellent panel discussion on Reg A+ which after the JOBS Act seems to be the new way for small companies to do IPOs. Still in its infancy there have been quite a few questions and concerns among issuers, broker dealers, investment bankers, and investors involved in the offering.
Of all the speakers, Mark Elenowitz, CEO of TriPoint Global Equities, LLC a boutique investment bank, with corporate finance and sales, and trading services, stood out as the most knowledgeable on the subject. The biggest company of discussion was, Elio Motors. Elio is the only company to date to successful conclude Reg A+ offering.
“I firmly believe the Reg A+ is going to bring back small cap IPOs. It’s an innovative way to market an opportunity to non-accredited investors, across all 50 states, using general solicitation, including the internet and social media.” Elenowitz explained to us.
When asked about Investor Marketing specifically, he responded, “This is a key point. Investors don’t wake up and say they want to buy stock. They still need to be sold. While Reg A+ allows issuers to reach investors utilizing nontraditional Wall Street ways, there is a cost associated with that outreach. Issuers need to plan for an outreach program that generates impressions, investor interest and ultimately investor conversion. We are finding that Issuers need to budget $200,000-$350,000 to reach the proper target audience. Issuers that already have loyal customers, brand awareness and large social followings will be more successful in educating those investors on the merits of the company versus an unknown start-up or non-consumer oriented product. The marketing program will not only benefit the issuer by attracting investors, but the Issuer will also benefit by significant additional exposure for the products and services of the issuer. It’s getting two benefits from one advertisement.”
His firm recently created BANQ, an online platform that streamlines the matching of investors with quality growth companies and alternative investment opportunities. BANQ® is focused on Regulation A+ offerings and IPOs. In addition BANQ® offers some of the lowest trading costs in the industry at $.99 and $3.95.
As a company one of the first things we do is make sure our clients are telling their story in a way that is easily understandable to investors. While generally we first focus on the digital communications, these concepts apply just the same to speaking engagements, elevator pitches and more. One line my partner Jason Hilton always goes back to is, “Remember, your elevator pitch needs to be able to be given in an elevator ride.”
Of the many presentations we sat through this week, it appears companies still do not get this. In many cases the CEOs are reading verbatim, eyes down, no real presenting going on; and what they’re actually saying is so littered with corporate speak and industry jargon that most of the audience checks out.
I spoke to one broker dealer after a presentation at Marcum, “I could barely keep my eyes open in there, 90% of the presentations I see at these things are terrible, I wonder if these companies even prepare.”
Mr. Elenowitz spoke on the subject for us, particularly relating to Life Science companies, including biotechs, “When marketing an opportunity, the story needs to be short, direct and easy to understand. Investors will typically spend a few minutes at most determining if the investment is of interest.” In a more extensive conversation he said the reason some biotechs struggle to gain traction is because they do a poor job explaining what they do and why it’s important. Mark is a clearly smart man with the ability to fund companies with large amounts of capital. His exact words were, “I have no idea what most of the companies do.” If he doesn’t understand, how do expect anyone else to?
While the conferences were excellent, there was a couple issues we had. There was one room hosting the awesome panel discussions, ranging from subjects like “How to raise capital in the market” to “The future of the Cannabis industry”. While the panels were fantastic, the room hosting them was probably about 80 degrees. Everyone has full suits on for the most part. It’s always better to keep it cool. Turn up the A/C.
That brings me to my next point. I have never seen so many plain suits in a room in my life! One of the keys to these conferences for companies and attendees alike is to standout. Make them remember you. Wear a unique shirt, tie or other accessory. Everyone hands out cards. Have a unique card if the black suit is your thing. My partner wore a unique hand made wooden watch that got several comments and helped segway into what might be some serious business. The next day he wore jeans with a vest. As soon as we walked in the door people started telling him how it was refreshing to see someone stand out. You could imagine the day we had. So while you’re not not being “ugly”, you’re also not really doing yourself any favors.
Moral of the story. Be cool. Be unique.
All said, the conferences were successful, and we look forward to attending next year.