From 2011 to early this year, I conducted a survey with 407 micro cap investors. I did the survey primarily through email but I talked to quite a few of the investors as well.
I wanted to get inside the minds of micro-cap investors and see what “made them tick”. I already had some idea of the investor mindset because I have also invested and traded many micro-caps in my time, so I know the landscape well.
The Missing Piece While I received a wide variety of responses to the questions I asked of these investors, one item stood out above all the rest… Even though the answers were different and worded differently, the nearly unanimous item for them was that the most of the companies they looked at presented:
NO COMPELLING REASON TO INVEST.
When you think about it, that response makes complete sense… When investors find no compelling reason to invest in a company, they leave and go look for something else.
What is a compelling reason to invest for the typical micro-cap investor?
Content that quickly engages the prospective investor EMOTIONALLY.
The first place most of these investors started the due diligence process was at the company’s website. Micro-cap investors are looking for a great story and they are looking for that story to be told in photos, graphics and preferably, video. Many of them have an aversion to reading more than a line or two of text.
This visual content that will emotionally engage the prospective investor needs to be incorporated primarily on your home page and your investor page as well as the rest of your site. The average micro-cap company’s website is text heavy with typically only a couple of photos or graphics.
Most of the investor pages I have looked at are a feed or composed of feeds from a third party, which is all text, numbers and maybe a stock chart. This is NOT going to engage many micro-cap investors.
The entire Internet is going visual. Visual storytelling is the trend not only of the future but it is here now. With this visual emphasis in mind, I have had differences of opinion with a few CEOs with regard to their website design. Some of these CEOs want to present an appearance that is “corporate” with shades of gray or dark blue with a white background. They wanted minimal images. In other words, an “all business” website. They wanted to appeal to sophisticated investors they told me…
In most cases, I was able to convince them with this simple argument: If you are a micro-cap company, you need to appeal to the investors in the place you are right now. As you move up, you will have the fundamentals to appeal to sophisticated investors and you will adjust your website accordingly.
Nearly every company has a compelling reason to invest and will appeal to a group of investors somewhere out there online.
We need to put a concerted effort into finding that compelling reason to invest and telling it in a visual way to have success going forward.
Many micro-cap investors are young and their investment objectives are far different from the objectives of investors of larger companies. They are looking for a “get rich quick” investment.
While their objectives may seem unrealistic at times, if you want to attract these investors, give them what they are looking for:
A compelling reason to invest in your company.
Let Them Find it Quickly Your compelling reason to invest must be obvious and get the attention of the prospective investor quickly.
Consider this: In 2014, Time Magazine reported that, as a result of a study by Microsoft Corp, it was found that the average attention span for a goldfish is nine seconds. Conversely, according to the same study, human ability to concentrate on one item has now dropped to 8 seconds. The ever-increasing effects of the digital lifestyle was cited for the drop in attention span. In fact, the study found that an individual’s ability to focus dropped from 12 seconds in the year 2000 to 8 seconds by 2014.
Our entire society seems to suffer from attention deficit disorder. It is not likely to improve as time goes on. For the younger investors of micro-cap companies, you may have well less than 8 seconds to grab their attention.
Optimize your website and give it visual impact. Illustrate your path to profitability or whatever your company’s ultimate goal is… Doing this will provide better results than anything else you can do on the “investor relations” front.