The public market can be a wonderful place for a company to raise entrepreneur-friendly capital.  Public market capital tends to be less structured than private capital, and companies tend to have higher valuations.  Going public also provides a means for the stockholders of an issue to capitalize on increases in valuation and obtain liquidity.

At ClearThink our principals have extensive public transaction experience and have observed that are a few factors which determine the potential for a company to be successful in the public market, irrespective of whether the shares will be listed on OTC Markets, Nasdaq, NYSE, or any other exchange.

Under Promise and Over Deliver

Managing investor expectations is very crucial.  It is always better to positively surprise investors than to negatively surprise them. We always advise our clients to under promise and over deliver.

News Flow

A key determinant of a company’s success in the public market is the ability to generate news flow.  News about new clients, new hires, or other company developments, as well as industry developments, are very important to public market. If your company has the ability to post weekly news flow, it may be a great fit for the public market.

Investor Relations

It is of critical importance to distinguish an investor relations program from public relations. Public relations is targeted towards potential customers and partners to increase awareness about a company, its products or services. Investor relations, however, is targeted towards potential investors. The two groups are often comprised of different individuals.

Picking the right IR group can be a difficult and time consuming process. We have been fortunate to meet many of the people in the investor relations world over the years, and have identified a several groups who we have found to be very effective at reaching investors and assisting in building a market of engaged shareholders.

Growth and the Use of Proceeds

Investors are attracted to companies which they perceive to have a well vetted and dependable plan for the use of raised capital to fuel the growth of the company, thereby increasing overall value and value per share.   Failures by a company in this regard will undermine fundraising efforts, as well as cause a loss in investor confidence, which often leads to a sell-off, and a corresponding drop in stock price.