Today is the release of my first newsletter issue for Panolia. This marks the beginning of a new initiative to educate on various investor relations topics and how they apply to Canadian microcaps.

Last year, we saw a growing need to develop a resource to assist small issuers (market cap of less than $100 million), particularly in Canada, in understanding investor relations.

We’ve seen too many companies fall victim to the same pitfalls or miss significant opportunities they could have capitalized on with the right approach.

The effort will have been justified even if only one company benefits. 

Unfortunately, the past few years have been tough for small Canadian issuers. The S&P/TSX Venture Composite Index has returned 1.32% annually over the last five years (as of January 25, 2025), significantly underperforming major indices such as the S&P/TSX Composite, Russell 2000, and S&P 500.

Furthermore, trade volumes and values on an annualized basis are down approximately 70% from their 2021 peak (as of December 2024) and have continued their secular decline since 2017.

Adjusted for inflation, these statistics are even more worrisome.

However, it’s not all doom and gloom as the markets typically come in cycles. 2024 was a strong year for profitable companies with solid balance sheets and demonstrated growth. 

Nonetheless, properly engaging with the markets could be crucial to ensuring your long-term success, and in some cases, your survival.

We believe that you can become a stronger, more resilient organization by improving your investor relations efforts.

This mindset is exactly what drives both our mission and success to date at Panolia.

I aim to publish a monthly newsletter exploring topics you may not have previously examined.

Most of the content will feature my experience as the Founder and Principal of Panolia. However, other guests may appear from time to time to share their perspectives.

Let’s dive into it…

Markets are more art than science. This is purely my opinion, and the following is what I’ve observed, but I believe a pragmatic approach to investor relations can help drive your company forward.

Public companies are indeed held accountable by their shareholders. While this may seem like an obvious statement, it's essential to remember it amidst the daily operations of running a business.

Shareholders will either be your biggest champion or your biggest nightmare. Effective investor relations are crucial to maintaining open communication channels between the company and its shareholders, big or small.

For many investors, it’s almost impossible to get a response from a company’s investor relations contact, who is usually the CEO. Responding to potential investors, current shareholders, and other key stakeholders is crucial for building trust and credibility.

Because of this dynamic for microcaps, the bar for responsiveness not high. But it also presents an opportunity for you as a company.

Lastly, there is some degree of control over who comes onto your cap table. A robust investor relations program can help you identify ideal targets who understand your industry, business, and are more likely to be longer-term investors.

It is unclear who originally stated this, but someone’s happiness is determined by their expectations versus reality. For an investor, expectations are partly influenced by your communications and reality is determined by your overall execution. 

It’s already difficult enough running an emerging growth company. The last thing you need is more headaches due to preventable communication problems or a lack of strategy or planning for how expectations should be set.

Every company should work hard to keep their shareholders happy and set themselves up for success.

Furthermore, experienced investors have evaluated hundreds if not thousands of different companies. They generally provide very solid feedback. However, you need to have processes and communication channels open to gather, track, and iterate on this feedback. 

In addition, regularly seeking feedback from investors and demonstrating a willingness to act on their suggestions can also significantly bolster confidence. This not only shows that the company values its shareholders but also that it is committed to continuous improvement.

At the end of the day, your public company presence is another aspect of your overall business that needs to be managed.

Most importantly, microcap issuers have the unique problem of being less covered in the markets. You can be executing flawlessly on all cylinders but may not receive the credit you deserve in terms of liquidity and valuation. 

Many times, we see management teams executing a great business which goes unnoticed for quarters or years. There is a lot of competition for both attention and capital and it can be tough to stand out in the crowd.

While the numbers speak for themselves, a proper communications strategy and promotion are key to ensuring that the market recognizes and values your fundamentals appropriately.

This could materially impact your cost of capital. In scenarios where raising equity is being considered, it can have a substantial impact on dilution.

In conclusion, investor relations can be a critical conduit for your business. It serves as a vital link to existing shareholders, prospective investors, and provides insights into how you can execute and improve as a company.

It makes your life easier by building relationships and ensuring you have the right people on the train as you execute.

We believe that it’s important to be proactive as it not only helps you fine-tune your execution but prepares you for future opportunities to raise capital when needed. 

I hope you found this first newsletter issue at least mildly interesting and helpful and look forward to writing to you in the next ones.

Below are the latest announcements of investor relations and promotion agreements by Canadian listed companies (TSX-V and CSE).

Although each contract varies, I have highlighted the cash component of the disclosed agreements and provided the monthly equivalent if the agreement covers a longer specified period.

⁽¹⁾Amounts have been converted to Canadian Dollars