Let’s face it: Traditional IPO communications can be a big challenge for PR pros to successfully manage. Not only must they take advantage of a moment-in-time news event to maximize publicity for the company and its public offering—while supporting the aftermarket—they must also avoid running afoul of a very long list of regulatory “don’ts.”
For starters, think “quiet period.”
Enter the Reg A+ IPO. This novel pathway to a public offering, introduced as part of the Jumpstart Our Business Startups Act of 2012, known as the JOBS Act, enables companies meeting certain criteria to raise up to $50 million from both Wall Street and Main Street investors —and market shares directly to the public without nearly as many regulatory hurdles.
Few companies to date have executed successful Reg A+ IPOs—but more are aiming to try. This will create new opportunities for PR and digital strategists to add value to the capital-raising process by designing and executing communications campaigns that would otherwise be verboten under the securities laws governing traditional IPOs.
Here are four aspects of Reg A+ IPO campaigns that PR and digital strategy professionals should consider when contemplating a potential assignment:
Devoted fans go a long way
Companies with dedicated fans or strong brand recognition in the marketplace have a distinct advantage when it comes to Reg A+ IPOs. A case in point is Chicken Soup for the Soul Entertainment, which in August became the first company to reach the Nasdaq Global Market through the Reg A+ pathway, raising a record $30 million.
Parent company Chicken Soup for the Soul took its entertainment division public with a unique advantage: it has an iconic and beloved brand, with nearly two million followers on Facebook, 65,000 on Instagram and 24,000 on Twitter. No wonder other consumer-facing brands such as Fat Brands, parent company of the more than 160 Fatburger restaurants, and Bobby’s Burger Palace, are now seeking to follow suit.
Education is essential
Even if prospective shareholders are attracted to the company and its investment proposition, the concept of a Regulation A+ IPO is not well understood. Campaigns must therefore include an educational component. A media relations campaign can introduce the company and elevate key investor messages while educating target audiences about how Reg A+ IPOs work.
A social media campaign can target fans of the brand or people whose interests align with the company’s mission, driving them to a consumer-friendly landing page that spells out the investment opportunity and explains how the Reg A+ process works. DSTLD, which is seeking to disrupt the $200 billion fast fashion market and is the first fashion brand to use Reg A+, has featured educational messaging prominently in its investor-facing campaigns. The headline in a recent ad in GQ magazine: “Why should only rich people and venture capital firms be allowed to invest in start-ups?”
Site visits are not the same as conversions
Getting people to click a Facebook ad or visit a landing page is one thing. Convincing them to buy stock is another. That’s why it’s essential to target and test multiple audiences using detailed demographic and interest profiling. Pixel targeting can help you understand which campaigns are driving the best conversion rates.
And testing different conversion objectives may also make sense—for example, passing leads to a brokerage firm that can make telephone calls to prospective investors might yield a higher conversion rate than sending interested individuals into a self-service online brokerage experience that involves multiple steps and may be difficult for individuals to complete on their own.
Plan for an integrated campaign
Putting the “public” back in public offerings is perhaps the most exciting element of Reg A+ IPO campaigns. After all, never before has a company been allowed to ask fans and followers via social media to buy stock in the company. But communications pros need to think bigger and broader than social media to run a successful campaign.
As with any public relations program, generating a steady stream of positive media coverage is essential to build the brand, alerting the investing public and ultimately executing a successful Reg A+ IPO. Attracting institutional investor interest, in addition to individual investors, is an important outcome, so it’s imperative that the communications program makes a strong and succinct case to brokers, bankers and other professionals who can influence the outcome of the IPO.