If your company has more than a few shareholders, you know the challenges: regular reporting and correspondence, annual meetings, tax filings, and most challenging of all, managing anxious shareholders. And if your company has been around for awhile, then some of your shareholders already may be yearning for an exit, either in part or in whole. Maybe they need to pay for a house, or a child’s education. Maybe they are hoping to clean up their estate. Maybe they just need liquidity, plain and simple.
For starters, communicating regularly and effectively with shareholders can become an onerous and truly exhausting burden. If your company procrastinates on investor relations (or worse yet, ignores it), then all kinds of problems can crop up. Angel investors frequently lament, “The only time I hear from [so-and-so company] is when they want more of my money.” Yikes. That’s not an effective shareholder communication program!
More challenging is when shareholders start asking the company to buy back their shares. Talk about opening Pandora’s Box–this really spells Trouble. First off, the company may not have the resources to buy back those shares, even if they wanted to. Second, as a good fiduciary, the same purchase offer must be made simultaneously to all shareholders. Third, private stock certificates almost always include restrictive legends, which spell out policies like non-transferability and rights of first refusal. Overcoming these legends and restrictions can require expensive legal opinions, months of time, and usually board authorization. In most cases, the easiest answer is to just say no.
At Nth Round, we are committed to helping private companies meet shareholder needs, including liquidity. Our SaaS offering gives your shareholders their very own secure, invitation-only, one-stop shop for investor relations and liquidity. Your easy-to-use online dashboard will include company background, communications, recent news, and up-to-date financial reports. The system automatically sends alerts to your shareholders when new content is posted. Finally, you can sit back and provide shareholders with a consistent, seamless, nearly effortless, communication program. Phew!
Importantly, your private investor dashboard also includes your own exclusive Nth Round liquidity platform. It’s your very own dedicated private market. Inside this blockchain-protected walled garden, every aspect of which you control, shareholders can create Asks to sell shares, or Bids to buy shares. Alternatively, your shareholders can browse existing Bids and Asks, and accept any offer that suits their liking. It’s easy, intuitive, and fun. Pricing can be market-driven; or as we generally recommend, you can stipulate upper and lower bounds so that guardrails are in place to assure that Bids and Asks are consistent with company objectives.
Hold tight. The world of private investing is about to change forever. Liquidity no longer will be restricted to public companies, or rare and expensive offerings (like IPOs, M&A deals, and secondaries). You need not wait. Now your company, large or small, can enjoy the benefits of superior investor relations, and most importantly: liquidity.
Chris is a recognized technology entrepreneur and executive. He has extensive experience with blockchain programming, artificial intelligence, surface science, process control, and public and private finance. After starting at Dow Chemical, Chris co-founded CFM Technologies (NASDAQ: CFMT), a global semiconductor capital equipment manufacturer. Chris went on to form The Founders Group, and later Adondo Capital, a quantitative equity hedge fund based on computational linguistics. He holds eighteen US patents.