Strategies for Investor Relations and Capital Markets

Hello, everyone, and welcome to Everyday MBA, interviews with bestselling authors, innovative thought leaders, and top shelf executives, all sharing their best techniques and tips that you don't learn in business school. I'm your host, Kevin Crane, and I'm so pleased that you're listening. Our guest today is Danica Warburton. Danica is the founder and principal of Investability, a Sydney-based investor relations consultancy that helps growth-focused companies engage with capital markets around the world.

With experience across investment banking, hedge funds, and corporate advisory, and a background that began working underground in mining operations, Danica is an expert in investor relations and capital markets. And she's with us today to talk about investor relations and how companies can connect more effectively with investors. So Danica, welcome to the program today. Your career path is somewhat unusual from underground mining work to investment banking and now leading a boutique IR firm.

How has that blend of experiences shaped your view of how companies should communicate with investors? Yeah, it is a bit of an unusual background, I suppose. My parents, my stepfather and my father were in the mining industry. And so growing up in Western Australia, we're surrounded by, you know, the mining industry, natural resources.

During my university breaks, I would go up to the, well, maybe be sent up to the mines and I would do little placements there. And it was really good money. But I never really officially worked in the mining industry after I left university. My background's always been in institutional finance, so I started off doing investment banking at Citigroup and then worked around into different functions on the buy side and the sell side of finance before ending, you know, landing in investor relations and starting my own firm about six and a half years ago now, right before COVID and the bull market.

So it was a great time to start an investor relations firm. Well, I want to ask about Investability, your firm. You deliberately limit your client roster rather than focus on volume. So why is that boutique selective model important for you in building your business and your brand and building credibility with investors and boards?

I think that Invest Relations is a really high trust industry. And so if you're going to go, it sends to the signals goes both ways, I suppose. One for your clients. If you've got multiple different clients that are in the same sector or with investability, we work a lot with small cap natural resources companies by virtue of the composition of ASX.

And so if we've got a lot of copper clients, for instance, it sort of sends the signal to both the company, the corporate, that we may not be fully aligned. And also to investors, if we're promoting a bunch of different companies in the same sector, it can become confusing. But I also think by virtue of what we do on a daily basis, we're building relationships, we're, you know, developing pitch deck. So you've got to be so across the story.

And it really lends itself to being very high-touch, smaller-scale boutique for us anyway. I think there's other investors that - invest relations firms that maybe focus on distribution, but I do think that that's different from investor relations. Now, your early days in capital markets, you operated both on the buy side and the sell side. So what lessons from those perspectives are most valuable to you now when you're advising companies today?

Yeah, I think it's given me a great grounding in what investors want. So from the buy side, it was really how investors, like funds and family offices, filter their investments and what process they go through. I think, you know, it's really interesting to see what's investable to them as opposed to maybe what gets a quick no or what may be interesting but not investable. And then on the sell side, working for the broker, broking firms and in corporate finance and ECM, that was interesting from the sense that putting together the deals and being able to sell a story you know book the roadshows And it probably gave me a really good foundation in the listing rules as well So I think the confidence of those two you know buy-side and sell-side experiences was really, really helpful based to be able to then start an investor relations firm, which is all about knowing how to communicate with investors, what they find interesting.

and, yeah, at the end of the day, being able to speak to, we speak to both buy side and sell side, probably more predominantly buy side. But, yeah, it was a great foundation. What are some of the biggest mistakes or narrative or communication mistakes that you see management teams make today and how should we fix those? I think working, especially with small caps, they tend to over-promote or under-promote.

So, well, probably the most common error to start with is that we see a lot of companies promoting operationally rather than talking about what it means. What's the so what for investors? Like what is the investment highlight? And so we see too much jargon in ASX announcements, for instance.

There will be really heavily operationally focused and miss the investment thesis altogether. then we see companies either sort of under promote they'll have inconsistent news flow they'll just go there'll be long silences in between in between news and so this sort of going dark mode is a terrible signal for investors they naturally think if something if you're not communicating then something must be wrong and then on the flip side of that we see the over promote or companies that go out and there's not much to talk about, but everything's really, really hyped.

And so I think in that case, there's a real credibility and a regulatory risk. I think the key things you do to fix those are quite easy. You need to just find what is it about your story that is unique. For small caps, you know, for instance, if it's an exploration company, and they may not have worked up their projects to a high degree yet, there's still going to be things that are unique about the company.

And sometimes this is about the people or the backers behind the company. The other things would be just ensuring like a continual cadence of news flow. Investors like to be kept up to date. And even if it's not transformative news, I think it's always good to set a regular cadence around news flow.

And it doesn't necessarily need to be material news. For instance, yesterday we hosted just a webinar updating shareholders on where the company was and the progress that's happened over the last couple of months. And then I would say in terms of sort of not being too jargon heavy, a lot of company executives naturally are, you know, they might be technically skilled and maybe not great on the marketing side and that's where sort of an investor relations and media relations firm comes in.

So when writing announcements or any sort of shareholder communication, it's trying to, you know, really get down to the so what and the key takeaways and leading with those investment theses. You know, folks, I have the pleasure of interviewing some of today's top business authors and thought leaders and I learn a lot and so do our listeners. Would you like to be a guest on Everyday MBA? Well, I'd love to speak with you too.

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You are listening. You are listening. You're listening to Everyday MBA. We are here today with Danica Warburton.

Danica is founder and principal of Investability, and she's an expert in investor relations and capital markets. And she's with us today to talk about how companies can connect more effectively with investors. You can find her and find out more at investability.com.

au. Now, Danica, you were talking about the cadence and the mix of communications and it's a thoughtful approach that I think could be quickly overlooked. And in fact it seems to me that many companies could easily underestimate how quickly their investor narratives either can break down or become outdated What are some of the early warning signs that a company story is starting to lose credibility in the market I think sentiment is a leading indicator. So, you know, there's just a barrage of sources of information where you can go online.

In Australia, we've got a stock forum called Hot Copper. It's a predominantly retail focused sort of chat forum and investors go in there and they discuss their sort of views on a company. You know, we've got Reddit, social media, even just emails that come through either from institutional investors or individual self-directed investors. And so I think you know when investors aren't happy.

Awesome as well, it'll be reflected in the market valuation, the share price and the volume might start going down, quality of meetings that you're able to get. So these are things that you need to address head on. And so I think that's why it's really important. There's so many tools out there now where you can monitor in real time a lot of the sentiment changes.

I'm fascinated by the mix and the strategy behind this sort of connective tissue. And for me, I'm just thinking ESG and other non-financial disclosures, that's maybe the biggest part of investor relations. And how do you help companies integrate those elements without diluting their core investment narrative? I think ESG, well, it's interesting, actually, because you see different themes come in and out of focus and in and out of sort of investor, what's at the front of their mind and what they're caring about.

And I would say that recently, probably in the last few years, ESG hasn't been the key focus. I know it's very prominent in Europe. There's a lot of supply chain visibility, and especially in critical minerals. And so we're seeing this year, especially with just the intense interest in AI and semiconductors and that broader industry, that that's filtering down into the Australian market by virtue of critical minerals supply and strategic metals.

So as you know, Australia is very rich in natural resources and our boss here, ASX, is very much focused on financials and so the big banks and natural mining companies. And so I think with that in mind, everybody's interested in how do we get surety of supply and security of supply out of non-China sources of critical minerals for the West. So I guess ESG comes into play in that role. um we did also there's a bit of guidance out at the moment where companies have been greenwashing and maybe fabricating some of their esg um credentials and so i think we've got to be really careful with only um you know having defensible sort of esg um guidance out there and only saying what we're actually doing rather than sort of like this greenwashing and and sort of making things up just to pretty up the deck or, you know, to tick a box.

Investor confidence can ebb and flow based on different conditions and cycles and market sentiment. How has investor behavior shifted recently from your point of view? And what should executives be doing differently as a result? Well, as I just said, I think we're seeing a lot of interest in the critical mineral space here in Australia.

and it does change. I mean, last year we were sort of seeing a lot of interest in gold and silver and precious metals and perhaps a flight to safety and this year the tide has changed. So as you said, investor sentiment does ebb and flow. I think some of the things that you've got to be aware of is more of the longer term implications of doing investor relations.

And it's not to say that you just sort of like jump on whatever's the new hot thing, but rather it's about building trust and credibility in markets and that's how you stay for the long game. I think the main thing about investor relations is built upon relationships and building trust and nurturing those relationships So some of the things that executives could do would be to know that when they you know, out pitching their company or their investment idea or, you know, if it's an earlier stage startup, that it takes a long time for investors to be able to have the willingness and readiness to be able to invest.

so it's a long process of telling the story building the trust and then also staying in touch and nurturing those relationships I think that's a key thing that we see in markets all the time is that a company will only communicate with investors or the investment community when they're about to raise money and at that stage it's just far too late I think you've got to be doing the legwork. So yes, although I do think that themes and investment preferences change, I think some of those key underlying principles remain.

that will help them succeed. You can find out more at everyday-mba.com slash advertise. That's everyday-mba.

com slash advertise. You're listening to Everyday MBA. We have been speaking today with Danica Warburton from Investability. We've been talking about corporate investor relations and capital markets.

You can find Danica and find out more at investability.com.au. Now, Danica, we have reached the action item round of the program.

I'm wondering if you could please provide us with three quick action items that our listeners can use to take advantage of your ideas and advice. Sure, Kevin. So following on what I just said, I would lead with the investment consequence rather than the operational detail. So less jargon.

Tell us the so what up front. Secondly, nurture relationships. It's a long courtship. Don't go silent.

Always be staying in touch. Even if you don't have any, you know, transformational news to share, investors always love to be kept up to date. And number three, maybe this would be a good exercise to do, and it would be to order your last four announcements or your last investor deck and have someone who maybe isn't fully across the space, have a look at it. And if they can't understand it, then you've missed the point, I think.

And you probably need to go back to the drawing board on the narrative. Danica, it has been great speaking with you today. We're just about out of time. But before I let you go, one last question.

You've given us some great advice here today, but what was the best piece of advice that you ever received? And how has it shaped who you are? This is a great question. I would usually say trust your gut instinct, but recently I had an absolutely bizarre thing happen.

My house got destroyed by fire. And I think that has taught me or this piece of advice that I keep coming back to is that you can't control what happens to you, but you can control how you react. so I think the power lies in your perspective attitude and actions and and that's a fabulous you know lesson to keep with you in life that is Danica Warburton Danica thank you so much for being our guest today on Everyday MBA thanks so much for having me Kevin it was a pleasure chatting with you that'll do it for this episode of Everyday MBA and do you want to be a guest on the show?

It could happen. Join our Knowledge Leadership Circle and be featured in an interview of your own. Be a guest. Just go to everyday-mba.

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