Building an Efficient Investor Relations Program
IR Program for Attracting Investors’ Attention
The strategy of communication for promoting an ICO is based on the fact that the startup needs to communicate with the maximum possible number of potential investors. Once the target audience is defined, the team has to find people who are ready to invest money in it. The choice of suitable advertising platforms and communication strategies is aimed precisely at this. However, it is difficult to attract investors’ attention, as they now have become more legible. Thus, various ICOs are being advertised using all possible methods.
An advertising platform for an ICO is a way of conveying information to interested communities. It is an effective way of attracting investors’ attention. The most powerful of them are:
- Mass media. The media itself should be chosen carefully. Sometimes, you may have to pay thousands of dollars for an article in top U.S. publications. However, serious investors who are ready to invest in a promising project usually read such articles. The article in the ordinary mass media is read by ordinary readers, who will invest, perhaps, a hundred or two hundred dollars, but no more.
- Search services. First of all, you might need SEO promotion for your own website, and, preferably, a blog. Secondly, create targeting advertisements, as they provide good results.
- Social networks and messengers. Channels of blockchain projects (and, accordingly, people who are interested in cryptocurrencies) are concentrated on Linkedin, Twitter, Facebook, and Telegram.
- ICO catalogs and calendars. Not all investors are ready to search for the announced ICO in all possible media, forums, and social networks. Catalogs and calendars of upcoming ICO projects are created for their convenience. It is advisable to list your project on all available calendars, especially popular ones.
- ICO ratings. These platforms are very popular among investors, and can greatly influence their choice. Each startup not only wants to get on the lists, but also wants a high score.
Communication is a basic tool for establishing investor relations, though it requires time, money, and enormous effort. The message should be noticeable, but not provoking. You need to be sure that people who have never heard of cryptocurrencies, and investors who have already invested in ICOs, all become interested in your project. At the same time, it is necessary to point out the advantages of your ICO for experienced investors, novice investors, and ordinary users.
Competition in the ICO sphere is huge, and investors choose those who manage to influence both emotions and minds.
Building an Investor Relations Program
The planning of a company’s investment activity is related to collecting, analyzing, and providing a full range of necessary information that has a vital, multifactorial, systemic impact on the company. To establish a strong connection with potential investors, a company should start by drawing up an IR plan. At this stage, startups often resort to the services of an intermediary or hire a personal investor relations manager. The reason for this is lack of experience in this type of activity. Startups shouldn’t totally rely on consultants, but actively participate in the development of their IR program. The consulting company studies the business plan and draws a conclusion about who can be a preliminary investor.
The first step in creating an IR program is to develop all items of the company’s white paper that encourage investors to become interested in the product. This includes:
- description of the project
- market analysis
- product/idea explanation
- blockchain solution description
- token value and liquidity
- team description and experience
- roadmap
- reimbursement opportunities
The next step is providing free access to the company’s data. The maintenance of ICO startup information transparency plays an important role in the IR program. Documents published by the company (white and yellow papers, roadmap, quarterly financial reports, official website information, etc.) are the main source of information about the project. IR itself assumes free access to information. By providing the full range of information on its activities within the framework of IR, the company prevents the dissemination of false information.
News, press releases, and public participation. Excellent companies have transparent information about their businesses. This can include their financial performance, capital growth, or the expansion of the market. Since crypto projects shake up traditional markets, blockchain startups must use advanced channels to initiate community participation.
Webcasting. A set of advertising channels and communication with investors must be related to communicating their main values to a wider audience. In the ICO market, IR managers can advertise the product through YouTube, Medium, etc. The crypto-informational industry is at the development stage, which means that communities are allocated across various channels.
Milestones and delivery message. The economy of blockchain is expanding day by day, and since the range of technology use cases is expanding, as well, it is essential that each company explain the role of blockchain in their project. It can be portrayed in the white paper or on an official website.
Liquidity management. Additional liquidity always enhances token trade value. The facts show that most blockchain projects that have raised funds through ICOs do not use them for the initially-stated use case. During a study conducted by Token Report and based on the analysis of 226 ICOs, it was found that newly-created tokens were applied to maintain the functioning of issuers in only 20 cases.
Crypto-education. The concept of cryptocurrency and blockchain is relatively new, complex, and hard to comprehend. Thus, educating readers and possible investors about cryptocurrency will certainly facilitate the attraction of new clients. For this, create useful content and publish it on the leading social platforms, such as Medium, Facebook, LinkedIn, etc.
Discussion of forecasts of financial results. The investor always looks at the last line of the income statement. Regardless of the form of investment, he is interested in the future cash flow of the company. However, the ICO team should never claim their project to be 100% beneficial. It is much better to focus investors’ attention on the reimbursement program and its opportunities.
Search for optimal conditions for attracting investments that will be acceptable to the management of the company. The task of the IR manager is to understand which terms and conditions are acceptable to both the investor and the company, and which are not. Additionally, the key to quickly finding interested communities and possible investors is understanding who your target audience is.
Discussion and elaboration of technical, legal, and organizational details. At this stage, the use of IR methods to ensure the transparency of the company is extremely necessary. Pay attention to the legal standards of your startup in order to avoid misunderstandings in the future. For this, describe the legal patterns in your white paper.
Gaining Investor Confidence
The issue of responsibility to investors is a significant factor for the company and its future. Therefore, it should be resolved wisely. When you run your own cryptocurrency project, be sure to provide important information to users before the ICO. In this case, it is important to prioritize the important points of the token sale. For instance, you should clearly describe the crowdsale terms and rules, the number of tokens to be released, and the ICO start and close date.
When formulating an idea, you can ask for user opinion on BitcoinTalk. The main stimulus for investing in cryptocurrency is tokens and their functionality. Thus, if the use of your cryptocurrency is not justified, you will have to search for investors elsewhere.
The main document of an ICO is the white paper. Perhaps not many people will study it in detail, but big investors and serious market players will absolutely do it. Accordingly, it is important to create a high-quality document that explains your project’s primary goals, values, chosen technical solutions, token economics, etc.
When advertising your ICO campaign, use all traffic sources that are available. Your main task is to attract as many readers as possible so that your tokens begin to be sold in the first minutes or hours after the crowdsale start. Each new user is your potential future investor.
To gain credibility among possible clients, clarify the following points on your website:
- The ICO widget, which shows the crowdsale open and close date and time.
- Explain how your token works.
- Build a roadmap.
- If possible, provide the audience with a working project or its prototype.
- Define the type of your cryptocurrency.
- Define the number of tokens to be released.
- Choose a scheme for token allocation: how much will be provided for the ICO crowdsale, what kind of compensation is there for bounty program participants, team members, etc.
- Propositions for early investors
- Preliminary arrangements for token liquidity
- Before the ICO start, announce the amount of funds needed to implement your idea.
- What are the opportunities for foreign investors?
- Motivation for investors: reimbursement programs, the opportunity to take part in company management, etc.
- State the required investment amount to make the project successful.
- Reimbursement opportunity in case your ICO is not successful
General Recommendations for ICO Investors
Investor requirements for available data about the company are:
- Investors should be aware of the company’s expenses and revenues.
- The company must publish and regularly update the roadmap and report on its implementation (or the reasons that prevent it from performing).
- Reliable data on team members and the ability to communicate with them should be provided.
- The company must promptly ensure the liquidity of its cryptocurrency, and comply with other obligations regarding token release, distribution, and use.
- The functionality of the token must correspond to the one stated in the white paper.
To meet these requirements, the project needs to:
- be legally registered (this depends on the country in which the ICO is launched and its regulatory laws)
- have an experienced and trustworthy team
- create a smart contact for transaction security and have an audit from third party
- provide measures to protect the system from hacker attacks
- provide a functioning system for registering applications and payments
- systematically report post-ICO status
Investors can also count on smart-contract protection. A smart contract is a computer algorithm that operates on blockchain technology. Accordingly, the information recorded in it cannot be altered. The algorithm itemizes the conditions under which the parties can perform any necessary transactions. It provides the ability to fulfill transparent transactions visible to all its parties without mediators such as banks, attorneys, etc.
In addition, to prove its transparency and credibility, the company must provide all important information about its concept, product, values, and goals. Generally, the first question that interests a potential investor is “What does the company do?” The investor needs to clearly see the goal pursued by the company, and make sure that its management is making every effort to achieve the goal.
Finally, IR departments shouldn’t concentrate their communication on the expense and cost of building the asset, but rather on the convenience of using the token and its value. Strengthening investor relations with regard to prices and market indicators can have huge adverse consequences, including revaluation/underestimation, speculator influx, or even worse.
Feel free to contact the Applicature team for more info!
