Case: Efecte - An integrated approach to investor relations

Efecte is a Finnish software company, specialized in digitalizing and automating its customers' work within the fields of service and identity management. As our inaugural "360-client," Efecte subscribes to all key investor relations services offered by Inderes. In a recent conversation with Efecte’s Head of IR, Lari Nikkanen, we delved into their IR strategy and the future landscape of investor relations.

While exploring Efecte's approach to shareholder engagement, we also probed Nikkanen’s visionary insights regarding the evolving IR landscape amid the digitalization mega-trend.

Incidentally, shortly after our fruitful conversation, Efecte was acquired off the Helsinki Stock Exchange. However, despite the acquisition of Efecte, Nikkanen’s views on investor relations remain extremely relevant to any company and IR professional out there looking to create great IR cases, build on shareholder loyalty and develop the work within investor relations.

Bigger than its size

In terms of their investor relations strategy, Efecte has, according to Nikkanen, aimed “to build a reporting model that scales as we grow as a company. So, we report a fairly broad set of metrics for a SaaS company relative to our size, which has been seen as an investment in the future as we are growing.”

Efecte’s stance seems to be signaling both a positive outlook on growing the business, smartly adapting their processes to that growth-mindset, and a desire to give their shareholders more information than what the company is obliged by regulations. The strategy, thus, appears to truly respect the information needs of investors. There hardly is such a thing as “too much (relevant) information” in terms of IR. In contrast, a company obscuring key information subsequently signals they have something to hide from the investors’ gaze.

Transparency driving investor communications

Nikkanen is adamant about what drives their investor relations work at Efecte

"We've started from the principle of transparency. We tell things as they are and try to serve investors by giving them the broadest possible picture of the company's situation – how we are doing, simply put.”

It appears that the transparency trend is gaining more foothold within the capital markets – perhaps partly due to the increase in retail investors demanding openness, and partly due to companies’ own determination to earn the trust of investors, to improve long-term shareholder engagement.

Within the field of traditionally dry investor communications, more and more companies build on their transparency by courageously highlighting the company’s culture and value base. This marks a shift in traditional investor communications focusing on hard facts and numbers. But how does Nikkanen view the change in investor communications?

“Personally, I would hope that it is changing. Especially in the software industry, where employees are extremely crucial for the company's success, I see that it also matters to investors what the atmosphere is like within the company.

Investment decisions can and perhaps partly should be made purely based on numbers, but in a business where people are at the center, I do see that transparency in investment communication is also a factor that can be taken into account in investment decisions, considering how people in the company are doing and how visibility is provided to this in investor communication.”

Seamlessness is key

Beyond transparency and more culture-centric investor communications, Efecte is striving for consistency in terms of both the message and the medium. From a technical point of view, seamlessly integrated Investor Relations tools are essential to achieve that. Lari Nikkanen views this aspect as one of the key motivations behind Efecte’s decision to acquire all IR tools from Inderes.

“The main reason [for choosing Inderes] was that we were able to get all the essential tools from one supplier. This holy trinity, namely research, investor pages, and news distribution, is at the core of investor relations, and we wanted these parts to communicate with each other.”

The benefits of sole service provider seem clear to Nikkanen.

“On results day, you can see it most concretely. You can focus more on your performance instead of ensuring that all the information is updated on the investor pages and whether the press release has been sent out. Nowadays, it's enough to arrive, get miked-up, and start talking.”

Beyond seamless technical integration, Efecte sought for, according to Nikkanen, “reliability and, on the other hand, proactivity. We are still a medium-sized company, and we do not have unlimited IR resources. So, in choosing a system provider, we emphasized that the provider – in this case, Inderes – also has a vision of what kind of content is produced and how it should be communicated so that our internal IR resources are used correctly.”

Simply put, the value a service provider can offer extends beyond mere technology. As a listed company specialized in IR software and the host of one of the most popular investor communities in the Nordics, Inderes provides its customers, in addition to the tools, invaluable insight into the requirements and desires of the target audience.

Employee is the new customer

Especially after the physical restrictions brought by the COVID pandemic, the field of investor relations saw a major shift towards digital environments. Investor relations events, working methods, tools and even legislation saw drastic changes. Though physical events have to some degree returned, the wave of digitalization is unlikely to withdraw back to the pre-COVID days.

There are now many great services and service providers in the market, enabling more efficient, digital ways of executing investor communications – Inderes being one of them – but the progress has hardly met its peak. Nikkanen provided a great point to where the IR tools could be headed:

“If you think about the tools we, as people who also use software in our work, use in our free time. Those software tools are primarily applications or web-based systems that do not require training. When do we think that when we download a new application from the App Store, we need training for it? And then again, when we go to work between eight and four, and start using the first software there when we go to a new job, there's onboarding for that. There's a discrepancy here, which in the long run, I think, should narrow down. So, approaching software more geared towards consumers rather than a more traditional, very heavy and feature-driven software. That is, making the employee the new customer.”

The Future of Investor Relations

Finally, I wanted to know where does Nikkanen believe investor relations and communications are heading beyond the tools that are used. In his view, digitalization is a means aiding in the work and minimizing human errors, not an end in itself.

“I hope that in the future, personal relationships and interpersonal interaction will have a bigger role, as they already do. I hope that IR can focus on that in the future. And that we can move away from manual updates and translation work. Of course, content production will largely remain in human hands, but the value-added part of that could be what I hope humans can focus on. So, I see this digitalization and automation continuing in IR as well.”

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