A Conversation with Jonathan Paterson
This month we spoke with Harbor Access Founder & CEO Jonathan Paterson about how Investor Relations has changed since 2017.
1. How has the role of investor relations evolved since 2017? IR shifted away from institutional investors to a mix that included retail investors. It became virtual and digital with virtual investor meetings and conferences - the use of social media becoming a key component. The collapse of sell side analyst coverage forced IR to fill that gap and produce peer analysis and more sophisticated investor targeting. IRO’s also had to take on an element of marketing to attract retail investors and provide direct access for this group of investors. IR no longer communicates around quarterly earnings but rather a continuous loop of information is now considered normal. All while ensuring Reg FD and avoiding selective disclosure!
2. We’ve gone through a number of cycles since 2017 - low interest rates, COVID, AI-driven momentum. Which shift do you think most impacted how investors approach the small-cap space? The short term nature of investors, even the long only funds. Given the constant global news flow that seems on a permanent 24 hour cycle, investors are looking for “what have you done for me this quarter?” Our clients are at the mercy of this shift, miss one quarter and your shareholder base will see redemptions and rotation to your peers. So this creates a delicate balance for disclosure. The importance of retail investors has increased in our space as they often provide the initial liquidity need to attract institutional investors.
3. If you were advising a newly public company today, what would you tell them to prioritize in their first 12 months that wasn’t as critical back in 2017? Stay private! All jokes aside, if you are going public, make sure you have the budget to market efficiently. We see so many companies go public and scrape through to fund the process with no budget left for investor relations. An IR program is an investment in the overall well-being of your company and as such should be decently funded. Conferences, newsletters, social media programs can all add up. Pace your IR activities around the year accordingly with a focus on 1Q, 3Q and 4Q - all key periods of the year that investors look to add or follow new companies. The other advice is that IR is not something you can switch on and off; IR is constant effort over a long period of time. Stay the course.
