Embracing SPP anxiety and doubling your outcome
“Yo. Your palms are sweaty, knees weak, arms are heavy;
There’s nothin’ coming through on the goddamn registry;
He’s nervous, but to the market, he looks calm and ready;
Praying and hoping that his SP will remain steady.”
OK. That’ll cringe-wrinkle your nose so high that it might actually swap places with your eyes, but I wanted to talk about the pain that is SPP Anxiety.
What is SPP Anxiety? It’s the two-to-three-week period during an SPP where you are watching your share price like a hawk, hoping like hell it doesn’t drop below the offer price and compromise your raise.
Luckily for you, I have scoured our database of 1,400+ transactions and spoken to countless CEOs and MDs. I have the perfect combination of data and insights to help you overcome SPP anxiety and unlock the potential of the humble Share Purchase Plan. Get ready, your next capital raise outcome is going to be less “8 Mile” and more “$8 mil”.
- Emails, emails, emails
Let’s not bury the lead: investors with an email address are three times more likely to invest in a shareholder offer than those without. Not having an email address is like booking Destiny’s Child and not getting Beyoncé or Kelly.
- Keep the fire going.
If you want to raise money from shareholders then get their email address and keep it warm. Communicate with them before, during, and after so that they know to expect value from you and, importantly, know that they are valued by you (and I don’t mean just sending your announcements - but do that too).
- Cycles exist and timing matters
There are bad times to raise capital: the May tax sell-off, reporting season, Christmas, and early Jan are clear examples. During these periods, there is more selling pressure and/or less buying pressure. The most important thing to get your deal away is to ensure your share price remains above the offer price. During the raise, nothing else matters more.
Therefore, respect the cycles and time appropriately. No matter how much people believe in you, options are of limited help. The simple fact is that nobody wants to be paying $1.20 for $1.
- Prepare and funnel
A large majority of companies treat SPPs like compliance work. Send out a doc from the registry, wait 2-3 weeks, then close the offer and think, "Hmm, why didn’t that work?"
If you’re wondering why more shareholders chose not to invest during your last SPP, then consider this: your shareholders were likely caught off-guard. Most of them aren’t sitting around burning a hole in their pocket, waiting for the right investment opportunity.
You need to be prepared with collateral and funnel shareholders into it. In my experience, dedicated websites work best, and videos are amazing. People want to see and hear why you want the money and what you’re going to do with it. Why is it better in your bank account than theirs?
So there you have it, three tips to help you reduce SPP anxiety and increase your capital raise outcomes.
In my experience, these three tips cannot be cherry-picked, but rather need to be combined. When this happens, they not only reduce the anxiety during the raise but can also combine to increase SPP results by 50%-100%.
SPP, it’s easy as 1 2 3, as simple as do re mi.
Want to learn how InvestorHub helped Race Oncology nail their SPP? Read here.
