Whatever way you do it, it’s just the beginning. ICO? IPO? Crowd-funding? Token sale? Any form of fundraising event feels like a massive task. And, when you hit your target, and you’ve raised the funds you needed to raise, you let out a massive sigh of relief. Everyone celebrates. Perhaps you have a party. But…this is only the start. The hard work is just beginning…
You now have shareholders or a community of token holders. The number of shareholders you have could be big or small. But, in all cases, these shareholders have invested their own hard-earned money into your business. You’re indebted to them now. Literally. You have a duty of care towards your shareholders and responsible businesses take this very seriously indeed. If you do this properly, the work involved in shareholder management can be huge.
Let’s think about the ways in which responsible businesses manage their shareholders…
01 Shareholder communications
Your shareholders have invested in your business because they believe in your vision or believe your business will be a success. If you don’t update them on your business progress, they could think that you’re not doing anything, they could think that your project is delayed, or they could think that you’ve scammed them. Regular communication is really important to keep shareholders updated and to share your good news…and bad news, when needed, too.
You can communicate in any way you like — emails, video interviews, online AMAs. You can engage your shareholders — for instance, you could ask them to be early testers of prototypes and new product features. You can do it in your own style — don’t feel you need to act like a corporate, when you’re a startup. Do it your own way. Whatever you do — communicate, communicate, communicate.
Don’t let a vacuum of silence consume your community and make them worry unnecessarily. After all, this could impact your bottom line. If shareholders are in the dark, they could sell your shares or tokens and cause your share/token price to drop.
Great shareholder comms sounds so easy. But it’s ever so easy to get it wrong.
02 Dividends
Depending on the type of fundraising event you’ve done, your shareholders may be entitled to dividends. Dividends are payments made to shareholders when the business has performed to target.
First, you need to make it clear what business results will end in a dividend. The business needs to share the financial or performance-related milestones that will result in a dividend — this could be the successful delivery of their annual profit target, for instance. Whatever the business milestone is, shareholders need to understand what the targets and timescales are.
Second, you need to make the payment. This can be a complex administrative process for businesses, as they could have hundreds or thousands of shareholders to send payments to. Many businesses will have global shareholders so you have to consider the currencies that you include and foreign exchange processes.
For investors, dividends are a great monetary benefit, of course, but also something that provides a massive reassurance to them. Receiving dividends shows that the business they’ve invested in is doing well so it helps to build trust with the investor.
Smart contracts on blockchain enable businesses to set up dividends in advance that can be triggered based on certain performance levels. This makes it easy for businesses to manage and it makes it transparent for investors who know what to expect.
03 Voting
There will be times when businesses will want to ask their shareholders to vote on a business decision. This could be when there is a big investment decision, or the opportunity for a merger or acquisition, or when Board-level selection decisions are being implemented. This can be a complex administrative process too — you need to explain what the vote’s about, provide background information, send out voting forms, collect voting forms back in, count them and communicate the outcome.
For investors, they need to have trust that the business will give them a chance to vote on certain decisions and they need to have confidence that the voting process will be fair.
Smart contracts on blockchain enable businesses to set up voting processes in advance that can be triggered based on certain criteria. Voting can then be completed on blockchain so it’s transparent and immutable. This makes it easy for businesses to manage and it makes it transparent for investors.
04 Annual General Meetings (AGMs)
Public businesses have a duty to run AGMs for their shareholders. This gives shareholders a chance to see the business’ performance and ask questions to the C-suite about the business strategy. Whilst private businesses don’t always have an obligation to hold AGMs, it’s best practice.
Traditionally AGMs have been formal meetings in large venues. But many businesses are run online AGMs or hybrid AGMs, where some shareholders can dial in. When you have global shareholders, which is often the case for businesses now, an online AGM makes sense for everyone.
05 Shareholder analytics
Businesses will want to know who their shareholders are — how many shareholders do I have? How many shares do they own? Where do they come from? How long have they been a shareholder? Are my shareholders buying more shares or selling shares right now? How have my shareholders changed in the last year? Who attended my AGM? Who voted? How satisfied are they with our business performance? etc.
Shareholder analytics, in the form of interactive dashboards, are a great tool for business owners. They can help businesses to track trends, identify problems, act on issues quickly and use this insight to make informed business decisions. They can also use predictive tools to forecast how their shareholder base will behave in future. Or identify which shareholders are also their business customers. The value of shareholder data analytics is huge.
Supporting businesses on Chainium
Businesses who use our equity network will be supported in all of these areas with online modules giving them tools and templates to manage communications, dividends, voting, AGMs, analytics and everything else that a responsible business needs to manage their shareholders.
Chainium has rebranded to Own. For more information about our brand change please read this medium post.
