Seth Farbman, an entrepreneur with 3 successful exits, is currently Co-Founder of Vstock Transfer.
Navigating the transition from a private to a publicly traded company is no easy feat. It is a process that requires a fundamental strategic approach. As an executive or board member of a company with its eyes set on the public markets, showcasing a compelling narrative helps captivate potential investors and conveys the company’s unique value proposition. The most vital part of this task lies in building an overall IPO narrative that resonates with stakeholders and the overall market.
I have worked on hundreds of IPOs at Vstock and am privy to the critical practice of crafting cohesive brand narratives from conception. Fine-tuning company identity is at the heart of affirming value to the market, and I hope my experience with this process can render this task of storytelling less intimidating.
1. Know your audience.
Understanding your audience and the overall expectations is the first step to crafting a successful IPO story. Investors are attracted to companies that offer long-term value, strong financials and a clear roadmap for future growth. If your audience feels a sense of familiarity with the company and feels part of the overall vision, that is even better. Try to look at your company as an outsider looking in. Why would they consider an investment? What makes you different from the thousands of other companies trying to attract investors?
You and your company must highlight the unique market position, competitive advantage and long-term growth potential. Demonstrating the genuine value proposition and its potential to yield robust returns on investment is critical to captivating your audience’s attention. Remember who you are presenting to.
2. Keep it simple.
Companies often make the mistake of including excessive information in their messaging. It is crucial to remember that your audience comprises financial experts as well as average investors who may not be familiar with industry jargon. This is especially true when it comes to our pharmaceutical and biotech clients. To engage them effectively, simplify your messaging and avoid complex technical terms. Focus on highlighting the value proposition that your company offers. By taking this approach, you can ensure that your message is professional, concise and informative.
3. Tell a story.
Highlighting key moments that led to your company’s success while outlining future growth plans is the bread and butter of a compelling IPO story. Investors seek not only financials but also connections with the people behind the company. Personal anecdotes and stories showcasing your team’s journey help engage investors on a deeper level. By appealing to their emotions through a captivating narrative, you can better capture their attention and foster an understanding of your company’s overall mission and vision. When I listen in on investor presentations, I oftentimes only remember the ones who were relatable and human.
To put it simply, we’re hardwired to relate to stories. Honing your art in storytelling can amplify your company’s value proposition and drive investor interest. You can be certain that you will tell this story hundreds of times, especially at roadshows and investor conferences.
4. Use data to back your claims.
Presenting concrete data and statistics is necessary to validate your company’s overall growth story. Tangible evidence, such as revenue growth and EBITDA, demonstrates your financial strength and market position. If you are a pre-revenue company, look to your data points explaining the overall market size. Biotechs should share the data behind the science, while pre-revenue fintechs might share customer retention numbers.
Showcasing your company’s track record and financial achievements provides assurance and confidence in an ability to deliver and succeed. With robust evidence and data-driven claims, you can attract and retain the trust of investors and stakeholders.
5. Use the leadership narrative.
An important element that oftentimes gets overlooked is the storytelling around your leadership team. Experienced leadership that has demonstrated success in the industry can affect how potential investors consider your company and its potential. Talk about the proven track record of your executive team in leading successful companies. A reliable leadership team instills confidence in potential investors about your company’s ability to navigate market uncertainties and achieve long-term growth.
6. Be transparent.
Transparency is critical throughout the IPO process and is greatly valued by investors and stakeholders. Demonstrating honesty and openness, even when confronted with less favorable news, is paramount. If your company has encountered notable challenges or setbacks, acknowledge them and outline strategies for overcoming them in the future. We have seen companies get dragged through the mud simply because they tried to hide a critical piece of information from the market. Authenticity always wins.
Conclusion
To be successful, craft a narrative that resonates. Remember, the message you put into the market should align with what the media will want to cover, what institutional investors want to see and what the retail trading community can get behind. Keep it simple while backing up every claim you make with data. If possible, it helps to explain why an investment now might be more prudent than waiting and watching for six months. By applying these general guidelines, you can craft a narrative that meets the broader market’s interest. Good luck!
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