As a manager, your main goal is to grow your company. In doing so, you will probably need to attract the necessary funding. Raising funds often implies ending with many investors (private investors, crowd, business angels) on board. This is also a constraint for companies willing to offer their employees the opportunity to invest their own money to increase their loyalty.
This means that you will need to manage their investment process first, and then continue to manage them until the end of their investment.
The investment process includes making sure you have clear and legally binding documentation in place, setting out the terms with each one of your investors. For equity investments, you will need documentation for the capital increase (the notary deed) and documentation describing the relationship between the company and its shareholders (a shareholders’ agreement with clauses about general meetings, reporting, exit and so on). In the case of debt, you need documentation for the loan (a loan agreement).
Investors’ management continues for as long as the investors have a stake in your company (either as a shareholder or as a creditor).
Each investor in equity needs to be convened to general meetings (where you must reach the required quorum and majority) and they will all ask you questions from time to time about the state of the company and the governance (which may require you to consult experts, such as accountants and lawyers). And every time you need to make changes to your shareholdings’ structure (new capital increase, change in the rights attached to the shares, …), you will need all of them to agree and sign the necessary documents.
For loans, you will have to do the payments to all the investors, which means, among others, keeping track of the payment details of each of them.
As you can imagine, the more investors you take on, the more time (and often resources) you will have to spend on managing these investors. Depending on certain categories of investors, you might want to structure the information flow and decision-making process differently. Indeed, while you may want to offer your collaborators the opportunity to invest in the company, this does not necessarily mean you want to treat them in the same way you treat your other shareholders and/or creditors. When faced with these issues and since there is obviously a lot of factors to think about, most companies move towards a pooled management of their investors.
Thanks to its decade-long experience managing investors through its crowdfunding platform and pooling vehicle (Spreds Finance), Spreds has established itself as a major player in the Belgian financial landscape. That’s why, in the upcoming year, Spreds will be publishing a series of articles that highlights some of the most important questions to keep in mind when thinking about investors’ management.
While there are different ways to organise investors’ management, the main takeaway is: the more prepared you are from the start, the easier you can make life for yourself in the future.
In this upcoming series of articles, we will delve deeper into different topics, discussing the main points of attention as well as the dos and don’ts. Our goal is to make sure you are more prepared so that you can simplify your life in the future, thus freeing up more of your time for your core task: allowing your business to grow. The topics that will be addressed are the following:
- A comparison of different pooling vehicles.
- The benefits of using a pooling entity (with legal personality).
- The best ways to put an efficient governance in place.
- How to organise the reporting with different groups of investors.
- What the pooling of investors means in terms of investors’ rights.
- What the pooling of investors means for the transferability of the shares/loans.
- The consequences of an IPO/exit for the pooled investors.
- How to make sure the investors benefit from fiscal transparency.
- Best practices in terms of management of pooled investors.
- We will close this series of articles with a global overview of the main takeaways.
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Who is Spreds?
Spreds helps meaningful businesses grow by connecting them to an active community of potential investors.
As the leading equity crowdfunding platform in Belgium, Spreds allows ambitious investors and entrepreneurs to come together in order to create success and boost the Belgian economic landscape.
More than 45,000 potential investors are present on the Spreds platform and are willing to provide their financial support, knowledge and connections to allow entrepreneurs achieve their dream and gain more visibility. Spreds offers them extensive support during the preparation of the campaign to help them raise funds responsibly. After the campaign, Spreds provides services to help them alleviate risks and burdens associated with the management of investors.
The investor community has access to an average of 1 new investment opportunity per week with transparent information needed to select the investment that speaks to them. To help investors invest responsibly, Spreds manages tax incentives related matters and provides diversification tools.
Based on its expertise, Spreds also offers transaction, investment management and pooling services to companies and professionals in need to make the management of their investors more efficient.