Drew Field
Direct Public Offerings
Screen Test for a Direct Public Offering
Five: The Company has natural affinity groups, with discretionary cash to risk for long-term gain.
Our first DPOs, starting twenty years ago, were consumer banks, which marketed shares primarily to their depositors. These customers obviously had some money they didn't need for immediate living expenses, money they had already trusted to the bank. Most of the DPOs we have worked on since have been directed to large groups of retail customers, suppliers and employees. But affinity groups can include people who don't have an existing relationship with the business. For instance, we have found that people in the same geographic community are likely investors, even if they aren't also customers. Other groups may be interested in the particular technology or corporate mission of a business. One of our clients appealed to a whole subculture of believers in homeopathy. Several wineries and breweries have attracted capital from people who like the idea of getting in early on a new brand of their favorite beverage. Just the numbers in your affinity groups is only part of the story. In looking at your demographics, it's also important to measure the strength of the affinity (how loyal do they feel toward your company), their ability to part with a significant amount of cash and the likelihood that they would use that cash to own shares (rather than spend it on some consumer item or put it away in a savings-type, low-risk investment.)
Six: Those affinity groups will recognize the Company's name and consider its share offering materials.
One of the advantages in marketing a bank's shares to its depositors was that they certainly would pay attention to any communication from their own bank, at least long enough to find out what it was about. Several other DPOs have been for companies with consumer branded products, and we've carried the logo, slogans and color identifications through into the share offering materials. We've had companies with names that were entirely different from their product names, where the marketing challenge was to transfer the feelings about the known name over to the new one. Creating recognition for a company with no identification among affinity groups is beyond the present state of the art.