The common goals of $10m and $100bn listed companies.

$10m vs $100bn - what's the difference?

We have 150 clients on InvestorHub, all the way from $5m market cap up the ASX200, from 300 shareholders up to 30,000+, and from Tassie to London.

It’s a great cross-section of the market, and part of our job (and my discussion with listed leaders like yourself) is about looking at where these companies differ, and what they have in common. 

We don’t just stop there - we look around the market at different companies, of different sizes, in different markets. Being listed does feel very personal, very unique. The combination of your company, team, prospects, size is unique - but there are a number of commonalities that flow through.

In short, yes, your business is unique, but not wholly unique.

With that in mind, let’s look at some of the core differences and commonalities across the market and what we can take away from it. As always this is general information - if you want to talk about this specifically to you hit reply or book a time with me here.

The difference in execution.

1. Scale.
   There’s obviously a scale that comes into play that’s quite different.
   
   A $100bn market cap company has a lot more to play with than a $10m one. It’s easier to raise cash at the larger end of town - or just have it from profit - but don’t forget it’s also easier to double or triple share price at the lower end of the market.
   
   Scale comes in all forms, but the bigger you are, the more resources and options you have. 

2. Availability of investors
   Small company registers are dominated by individuals. They may be HNW or Retail but they are overwhelmingly people investing their own money.
   
   The top end of town has a majority of the stock owned by professional investors a mixture of funds, family offices and UHNW.
   - If your job is investing money then you are available 9-5.
   - If this is not your job then you are typically unavailable during 9-5.
   
   Bigger companies can talk to people during the day. Smaller companies need to work out how to talk to them in the evenings, or asynchronously. 

3. Team size
   The bigger you are the more you have in budget the bigger your team size.
   - A $100bn market cap company may have 5-10 people in their IR team.
   - A $1bn market cap company may have 1-3 people in their IR team
   - A $10m market cap company may only have 1-2 people in the entire business!
   
   This change in team size changes what you can and can’t do, but even with a bigger team you also have a bigger need - with more shareholders.

The commonalities across the board.

1. Arms length investors determine the share price.
   Your Top 20 own a lot of stock - and a lot per holder. They are important but trade less than they own. On average, the top 20 shareholders own 43% but are responsible for 28% of trades. They are the majority shareholders but the minority share traders. So who is doing all the buying and selling?
   
   Everyone else. No matter if you’re big or small, its the mid to long tail of the register that's responsible for 77% of the trades, and therefore determining the price. Solving how to communicate to the arms-length investors in the same way you do to the Top 20 will help you now, and as you scale.

2. Getting new investors in the door
   The majority of stock is bought by existing or returning investors - yep, 75% of all stock is bought by people you already know.
   
   With that said, you always need to be bringing in new investors, and getting those old ones to come back in. Getting the plan together to warm people up, get them closer and then convert is something that all companies need to be working on.
   
   Think of an institutional investor - do they buy on market information alone? Unlikely even after a meeting or two. Selling your stock takes time, so having the right tools to nurture and re-engage interest is paramount to building a big funnel of new and returning investors and will be something you use all the way up the index.

3. Complexity of story
   "As mentioned last quarter, I'm going to try to record more of these [videos] for you, our investors. The idea being to give a bit more context on topics that we can't cover in the same way in our written or Q&A formats." - Atlassian CEO Mike Cannon-Brookes in his Q2 video update. This is a $100bn market cap company using video to explain nuance and drive focus to their shareholders - big and small. Obviously I am a great advocate of video to communicate complex business changes, get the team in front of the market and drive a personal connection - but it is great to see very large companies doing the same.
   
   Working on a way to communicate your complex story, your unique selling points, to the market in a simple way is useful for a $10m market cap, and clearly useful for a $100m market cap one too.

Cheers,
Ben