The Shortcomings of Financial Statements
Diving into the financial statements of companies can often leave us clueless about their actual operations. Standard 1 of the Minimum Standards of Online Investor Relations addresses this issue head-on. It emphasises the importance of each company clearly defining its ‘investment thesis.’
Beyond Mission Statements and Catalogues
However, this isn’t merely a mission statement, an outline of ‘what we do,’ or a catalogue of products and services. Rather, it demands the explicit articulation of the underlying reasons that would prompt an investor to consider pouring their resources into your company.
The Complex Elements of an Investment Thesis
Key elements could include core intellectual property, unique pricing power dynamics, and assurances of sustainability and longevity, among others. Yet, it’s not unusual to ask three executives what these passages encapsulate and receive three completely different interpretations.
Crafting Investment Theses: A Case of Seeds and Trading
Consider, for instance, a seed company whose IP is embedded in the DNA of the seeds they own. For them, crafting an investment thesis might be straightforward. On the other hand, a general trading company may find the task more challenging.
The Power of an Impactful Investment Thesis
An impactful investment thesis should be thought-provoking and stir intrigue, making potential investors sit up and think, “this could be an interesting investment opportunity.”
Leveraging Social Media for Investor Relations
For companies with strategic social media marketing initiatives, these platforms can serve as powerful conduits to reinforce the investment thesis consistently. Through a carefully curated mosaic of messages, investors can gain a holistic understanding of what a company is all about and, consequently, consider investing.
Standard 1: A Crucial Step in Online Investor Relations
In conclusion, Standard 1 implores companies to create a compelling investment thesis to help investors understand why they should consider investing. It’s the first step in a series of 16 standards that seek to transform online investor relations in emerging markets.