New shareholders in a company will want to know right from the start that they are valued.  Don't forget they have entrusted their hard earned money to you.  If the first correspondence they receive is less than satisfactory you will have to work that much harder to win back their early confidence.  So, what issues should this important first communication cover?  Here are some suggestions:

  1. All new shareholders, whether large or small, need to be equally welcomed.  It may well be that one of your smaller shareholders becomes your greatest champion.  They should all be invited to visit the company and/or meet the management team even if most never take up this offer.  It will give them confidence that the management has nothing to hide.
  2. Whatever the process new investors would expect a summary on how well the funding round had gone.  If you have used a Crowd Funding platform such as Syndicate Room they will have provided some of the details along the way.  Ultimately, what shareholders would like to know is whether they one of just twenty shareholders or one of two hundred?  Did the money come in quickly?  Did anyone get scaled back? These details will help them form an initial answer to the question: "Have I made a good decision to back this company?"
  3. Generally - and their appointment certainly should have been signaled in the pitch documents - before or immediately following the raising of funds new non-executives will join the board.  New shareholders will want to see the management quickly engaging with the non-executives and ideally the early appointment of a non-executive chairman.
  4. New shareholders will want to know that the new money is going to be well husbanded.  If you do not already have a robust finance capability the shareholders will want to know your plans for getting one in place soonest.  They will also want to know what financial information they can expect to receive.  Will this be quarterly or even monthly?  A word of warning here: do not over promise so you spend too much time preparing reports at the expense of growing the business.  Lastly, never send shareholders any information, financial or otherwise, that you are not completely confident is correct.  Better to be late sending out a report that is correct rather than rushing out something that may contain inaccuracies.
  5. There is an annual cycle to nearly all companies.  Shareholders will want to see that dates have been set for the board to meet at least quarterly to review progress against budget.  If the shareholders are not directors their first formal opportunity to quiz the management will come at the AGM.  Has a date been set for this?  If not, then when can the new shareholders expect a trading update?
  6. Share certificates and forms for SEIS/EIS relief.  Shareholders will want these quickly.  Here I would recommend producing attractive share certificates with your company logo on them.  Inform Direct will allow you to do this very easily.
  7. Lastly, that the management, with this extra money, will now be 100% focused on making the business a success.  After all, this is why the investors backed you.

I hope you have a great rapport with your new shareholders and they have reason to toast your good health after you deliver all you promised and more.

Here is a template which was well received.  Remember most shareholders will be only too pleased to help.  Do not be shy in asking for it - it often is freely given.

Please adapt this pro forma first communication to meet your particular circumstances.  Good Luck.

Henry Catchpole

CEO - Inform Direct

Hello to all new shareholders,

We are, unless Syndicate Room tell me otherwise, [57] in all.  Thank you all for your investment in [name of Company].  I am in no doubt that the task now is to make some good money. I am confident that the business is well positioned to do this.  Perhaps the number of other investors wanting shares after the pitch reaching the maximum is indicative of a shared optimism.

[John Smith], the chairman, and I are due to meet next week.  We will be reviewing budgets and setting dates for meetings next year including the AGM.  Our year end is 31st December and [the Accountants] have already agreed to start their audit in February so hopefully the accounts should be available soon after this.

For new investors the share certificates should be available the week commencing 16th December.  EIS certificate will follow later.  I will send them to the addresses supplied to Syndicate Room.  If anyone would prefer to split their shareholding between several certificates please do say.

For those of you I do not know, I look forward to meeting you - maybe at the AGM.  You are all of course welcome to call in and see us here [in Ipswich] at any time.  I should also add that I hope each of you will become an ambassador for [name of Company] and be comfortable suggesting colleagues/acquaintances try out our service.  If anyone would like a demonstration of our service/product I can easily arrange this.  Again, please let me know.

Lastly, it remains for me to wish you [all a merry Christmas and happy New Year].  May it be a fruitful one for [name of Company].


About Henry

Henry Catchpole led Suffolk Life Group from a team of 8 with £3 million in assets under management to a team of 200 with £3.5 billion under management.  His new company, Inform Direct, recently raised £450,000 on our platform and is hoping to revolutionise the way we interact with companies house.