You can't fatten a pig on market day

Roadshows suck. Your feet hurt, your voice is hoarse, and you’re exhausted from trying to decipher if your ROI-hungry audience is understanding your message. You’ve turned your investment opportunity into a non-deal, and the negotiating terms are not in your favour, all because you’ve left things until the last minute.

Now, unlike my last minute exam cramming days where I only needed to score 50% to pass the test, the world of capital raising punishes any outcome other than 100% or more. Getting “just under” the raise target is, simply put, considered a failure by the market. Even getting 100% can be considered a failure - surely if your deal was that great you’d be oversubscribed?!

The opposite of my late-night exam cramming habits can be found in my brother, Jeremy. Jezza is ridiculously smart, and sure he’s got some good genes (ahem), but that’s not why he’s smart. Jeremy is smart because he puts in the effort. He puts in so much effort that he was studying for his year 12 exams in year 11! He can speak multiple languages, he is a global leader in his field, and he could beat Sun Tzu at a game of Risk.

So what lessons can we learn from Jezza?

1. Don’t leave it to the last minute.

‍Raising capital is like building a muscle. Do a little bit every day for a long period of time or you won’t get the results. Companies that only talk to their investors when they (a) need a vote, or (b) need to raise money, typically underperform when it comes to raising capital.

The best raises I’ve been a part of are the ones that benefit from a mentality of “always raising”. Can you email one new shareholder every day? Can you call a different broker every week? (Read this handy article for four valuable shareholder engagement tips).

Can you publish a press release every month? Raising capital is the same as investing capital - value is created through a compounding effect. Doing one thing every day compounds into a highly engaged shareholder base that is willing to give you the capital when you need it (and on favourable terms).‍

2. Get organised.

‍Who is buying? Who is selling? Who is downsizing? Who should be buying more?

Your data is your most valuable asset right now because it tells you who is controlling your share price. Most issuers “tuck in” their top 20 because they hold 70% of their issued stock, but those shareholders don’t trade. I’m not saying they’re not important, but the people who are buying and selling your stock are probably “everyone else” - that unknown tail in your registry of small holders.

This tail is the one dictating your share price, your market cap, and your ability to raise, and they probably understand you as well as you understand them (get the hint?)! The good news is that you have the data to learn about them and the means to communicate with them, all that’s missing is the execution!‍

3. Get started, then get better.

‍Capital raise outcomes compound, and the more time you have to raise, the better the capital raise outcome (i.e. raise more, with a lower discount, with less selling pressure post-raise). Don’t let perfect get in the way of good.

In fact, write an email to an investor right now.

Once you’ve sent it, review it. How would you feel receiving that as an investor in a company? How could it be better? Once you have an idea as to how it can be better, then implement it by sending another investor an email tomorrow.

As my brother Jeremy says, “I don’t expect you to be perfect, but I do expect you to practice!”

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The quote, “you can’t fatten a pig on market day” cannot be more appropriately applied to the act of raising capital. The best deals are the ones that are completed before the deal is even announced, and that occurs when issuers put in the effort in the months and years leading up to the date of the raise. So be like Jeremy, and start studying for your year 12 exams a year early, your shareholders, your company, and your balance sheet will thank you for it.