Co-founder of venture-backed startup Xangle — bringing disclosure and information aggregation services to crypto.
So you've founded a crypto project, and you're going to issue tokens to investors as a way to generate funds and turn your vision into reality - but have you thought about how you're going to take care of those investors beyond launch? After all, getting buy-in to the initial token-sale doesn't mean you take the money and run with it.
While it may be the furthest thing on a founder's mind, thinking through how you'll manage your investor relationships can position your project for stable growth for years to come — but mishandling it could sink your project before it even launches.
And with crypto, the stakes are even higher.
Investor relations, or IR, is what an organization does to build and maintain the relationship they have with their investors. This involves keeping them updated on key decisions, supplying them with reports, and disclosing all information — both good and bad — that can impact their investment.
A combination of PR, communication, and finance, IR is an integral part of an organization's operations as it deepens relationships with current investors, or builds relationships with potential investors. If investors are staking capital with a project they believe in, the least a project can do is keep them in the loop on where their money is going and the progress being made towards realizing the project's long term vision.
IR is especially important for crypto projects who may not look like so-called “traditional” start-ups. Crypto founders may bypass traditional VC routes and seek alternate methods of raising funding, like through issuing tokens to early backers rather than opting for common IR-friendly plans. Additionally, start-up founders in the crypto space tend to have a background in tech and may be more concerned about code than relationship-building.
Investors are also taking on more risk than they would with non-crypto start-ups by putting money in that has no financial protection. In fact, with credible crypto companies being overshadowed by a recent history of scam ICOs, investors are taking on a lot of risk by investing. Yet both founders and investors are seeing opportunities to create value for customers with innovative projects in a new, growing space.
Despite the difference from “traditional” start-ups, one thing remains the same for any blossoming organization: Taking care of your investors, so they'll continue to trust and invest in you.
If you've just begun testing the waters with investors, about to issue your first tokens, or realize that your IR needs improvement, here are three best practices for keeping your business afloat and your investors happy.
1. Managing Expectations
Make sure you're clearly communicating your business plan and model to your investors. Your model should include what your project is, its value proposition, who your audience is, who your founding team is, and what your timeline is for launch and returns. Draw a line between your long-term goals and your short-term milestones. In a space where a number of crypto projects have resulted in exit scams, you especially want to show your investors how you plan to launch and scale — and especially what you're going to use their money for.
Additionally, be honest about their timeline for returns, and don't hype that your currency valuation will skyrocket 10x in the first week. Serious projects will want serious investors to partner with them for the long run, so being honest with your investors and managing their expectations around what you can and can't accomplish will go a long way towards building much-needed trust.
Next to customers, investors are the most important relationship to a start-up, so why not give the same kind of attention to investor awareness and engagement as you would to your customers?
The biggest focus of IR is in creating and managing a process around continuous communication. First, decide on the scope of your IR activities. This should include frequency, communication methods, and what kinds of updates you'll give — sending your quarterly earnings report via email attachment probably won't be enough.
Instead, think of more active strategies to connect with and update your investors. Hold an earnings call or video conference, have individual chats with investors, send out a newsletter, or have an investors-only place on your website. Think about what investors may want to know in addition to your earnings. Would they want to know about new ideas, new hires, new marketing strategies? You'll learn which types of information investors respond to best, but at the beginning, when you're building trust and a foundation for a potential long-term partnership, the more information, the better.
Erring on the side of over-communicating is also going to be beneficial in the crypto space where there are no regulations surrounding what can be shared to the public and no requirements around disclosures. With no clearinghouse of information on crypto start-ups, investors are either left in the dark or have to seek out information on their own around interesting projects. By being forthcoming with your information, you'll already distinguish yourself as a serious business ready for growth — and you'll help new investors in the space learn more about crypto as well.
Once you get a little ways into building relationships with your investors, you'll learn what information they respond to. You may find that some investors are just interested in your earnings reports and are fine with quarterly communication, while others may want to know more about your operations, or have industry expertise to lend — which is another benefit of having investors on your team. Building relationships with investors also means that you have people to go to if you need more funding for new projects in the future.
Additionally, investors may be a great source of feedback around new initiatives, how to manage cash flow, and where to allocate capital. But be careful not to let your investors begin piloting the ship. Take their feedback, but only implement what you feel is valuable — and by no means pivot your entire company based on an investor's suggestion, especially if they're new to the crypto space.
IR for crypto projects comes down to one thing: Building trust for longtime partnership and growth. There are great opportunities in this space for new technologies, new businesses bringing new innovations and creating new value, and giving investors exposure to crypto assets that they might not have had before. More crypto projects with more investment dollars backing them is only a good thing, as it will continue to build legitimacy and growth for the industry as a whole.
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