On Saturday, August 28th, Asia America Innovation Alliance (AAIA) held a panel discussion to take a closer look at investor relationship building. In this event, guest speakers Constance and Huayi , along with the event moderator, Alex shared their experiences from the PR and IR perspectives.
Moderator: What are the differences between public relations (public relations) and investor relations (investor relations) in terms of implementation?
Constance: I will start by sharing with you some personal experiences from working on North American PR and IR cases.
As you can see, my title and company are Public Relations Director of Anaconda Mining Inc. The company I work for is a gold mining company listed in both the United States and Canada. It is an industrial entity company. An industrial entity in North America, especially gold mining, has to meet many government requirements.
In mining companies, there are many parties involved, such as the government and indigenous communities.. As a PR, I have a delegate to communicate with the government and community representatives. As an IR, I have to build long-term relationships with the investors. In the preparation step, the VP of the company conveys the right information to community representatives and informs the preparation steps and compensations.
I think the concept of PR is to use the right way to convey the right information to the right audience in the right place. I have been involved in acquisitions and annexations of Anaconda company in 2016. Since the Quebec company has many mine samples which have high purity, we conveyed the stockholders with 7 cents per stock that we would act in the mining activities. Then the information was disclosed via newsletters in the stock app which includes sales, the gold sold quarterly, the changes of management board and directors. The stockholders not only got their return on investments but also learned valuable information about how to bring job opportunities to and develop close-knitted communities.
Huayi: Like what Constance said, if the information is disclosed to the investor at the wrong time, it is possible to miss a potential investor. If the information is disclosed to the wrong investor, even though the company receives the money, there would be a negative effect on the company. For many companies, founders are the faces of PR and IR
for the company. Founders are the ones who reach out to key investors and media outlets.
We aim to contact investors that can resonate with our company value, culture, and beliefs. By joining these like-minded investors, we would expand our network rapidly. It is the PR’s responsibility to make investors like us.
Moderator: For startups, how to combine PR and IR effectively to make the relationship with PR and investors sustainable?
Constance: For the listed company, PR is a bridge to connect the manager of the company with investors. Firstly, PR translates the information of the company to an investor or the audience. Then, collect the feedback from audiences through a social platform. Finally, deliver the feedback to the company to form two-way communication. Therefore, PR is a long-term plan which is built step by step. Moreover, to let investors trust the company would have more future benefits.
Moderator: How does the CEO of a startup achieve this cycle by using teamwork effectively?
Huayi: If you are considering a seed round, pre-a or a, you should join an incubator, such as YC and Tech Stars which all have Demo Day. Both PR and investors are screened by the incubator, which will reduce much of the credibility risks. On a typical Demo Day, you should meet 20-30 investors in one day, and then you will see many investors in the following 2-3 weeks. By the time of financing, you would’ve met at least 100 investors. For a team with better personal branding, it may require relatively less time and effort.
Moderator: How do you evaluate your PR and IR is good enough to convert the long-term plan into short-term detailed actions?
Constance: I think great PR and IR can influence the opinions and behaviour of investors. The core task for PR to do is to collect positive feedback for the company. If there is a lot of positive feedback with a high response rate from investors, then the company has established a solid network with investors. Also make sure that you can be easily found via online platforms such as LinkedIn.
Huayi: With regard to Startup, one of the effective ways is to use monthly newsletters or progress reports to attract investors in the long- term. It’s important to keep the investors up to date with your business progress.
Moderator: What if the CEO couldn’t present well as PR? Are there any other resources provided to the founders?
Constance: Once the company has appeared on the market, there is much information to disclose to audiences. PR has the responsibility to spend money and time on presenting themselves on any platform, such as Summits and trade fairs. Before the covid, we had spent 1-2 weeks communicating with others to show our progress.
Huayi: The difference between a startup and a listed company is that the startups have limited resources that they can allocate on PR. Startup should analyze the product market fit and revenue as soon as possible when the company has limited resources.
Moderator: After we have attracted investors, how can we conduct due diligence?
Huayi: Many people have been part of a due diligence process whether they know it or not. For example, people may ask if you have a reference to talk with when you join an interview or apply for something. This is usually part of the due diligence. Other tasks include checking if the documents are legal, such as employees’ contracts, customer purchases, and if the company needs the help of a lawyer for the debt-equity check, potential risks of IP.
The angel investor focuses on three things, team, market and product. They may check the company’s finances and find a lead to do diligence after pre- A or B rounds. In most cases, theywill request a data room to search for information when they are with institutional VC. Usually, it takes 6-7 weeks for the pre-A round, but it only takes 4 weeks with the help of the data room.
Constance: During my due diligence process, I found that our data room involves the government and some Regulatory authorities under the government, such as environmental supervision investment, component supervision department, and other kinds of supervision departments. Usually, we finished PEA (preliminary environmental assessment), and then EA (Environmental assessment), which took 6-8 months per assessment. In the meantime, PR needs to prepare a package of documents which is about 200 pages.
Moderator: What if investors are hesitating about investment, should PR and IR push forward them?
Hua Yi: In my opinion, we need to communicate with investors regularly to see who is hesitating and why. Gaining their feedback and responding quickly to their feedback is very important in that it shows you value investors’ opinions. Through communicating with investors we will find out how the investors think of us and how we can improve our business.
Moderator: Finally, what kind of advice can you give to our entrepreneurs?
Constance: I think this problem has a lot to do with the nature of the industry. From a generic point of view, you need to know who your potential investors are. It’s like when you do anything, you have to know the purpose, and you need to know yourself and your enemies well. Also, you must always be prepared to be challenged and face challenges like opportunities to grow. The entire process of PR and IR is to be prepared for the challenge and strive to be less challenged next time. Most investors, including the government, would value your ability to handle difficulties.
Huayi: If you are a founder and you have questions or doubts about your fundraising, raise your voice before doing due diligence. Because the purpose of investment is to solve problems, not to avoid them. It’s a good idea to communicate the potential risks of the deal to all the investors and partners so that they know what they are getting themselves into. Integrity and credibility are also very important for any startup founder, so try to be sincere with all your potential investors.
Moderator: So credibility is always the first. “Fake it until you make it” also requires a bottom line.
Hua Yi: Very true, especially for biotechnology companies. There will be some problems that cannot be solved, especially when it comes to people. At this time, you “fake it until you make it” you are “never going to make it”.