Year Two: Preparing for the End of the One-Year Stock Holding Period
A 12-month holding period exists on the shares you sell to equity investors during your crowdfund investing campaign. As the 12-month period comes to an end, make sure that you’re ready for it. Investors will be reevaluating your company and the progress you’ve made. At around the ten-month mark, you should start getting solid data together to show your progress and the ROI you’ve created for your investors.
You definitely want to avoid any sort of mass exodus of investors. If too many people try to sell off your company shares as soon as the 12-month period ends, you’ll be stressed and distracted from running your company. The better you communicate with your investors throughout the first 12 months, the better positioned you’ll be to keep more of them around.
Your job as the head of your company is to create as much revenue as possible, but you must think about revenue in the long run. Putting investor communication in place early on will save you distractions down the road. Communicate clearly and often with your investors. Make sure you’re answering their concerns and taking their advice when warranted.
Expect some investors to depart
No matter how good of a job you do, how well you communicate, or how much money you create for your investors, some of them will undoubtedly depart at the end of the 12-month holding period. Even if you’ve done an amazing job, some people will just simply need the capital for other expenses in their lives.
Be prepared for this reality, and don’t take it personally. Seeing investors depart could be rough on your self-esteem. Don’t let this get in the way of your running your company. If you’ve done everything that you were supposed to do and investors are still leaving, take things in stride and continue to create more revenue for your company.
Anticipate the need for new stockholders
Knowing that some of your investors will undoubtedly depart after the 12-month holding period, you should anticipate the need for new stockholders. The investor is responsible for selling her own shares, so you don’t need to worry about that. However, you should keep your ears open for potential new stockholders who could buy those shares if they can add value to your company.
For example, say that you have some advisors who’ve been helpful to you over the last year, and they aren’t currently equity holders in your venture. They would be a good place to start. If they were helpful without any skin in the game, think about how much more help they may give if they stand to gain financially from the advice they’re giving you.