Investor Relations Q2 and Beyond

Context

This post is a follow-up to @metfanmike’s DPI Institutional Sales Strategy. In that post, and as a component of the broader Index Cooperative business development effort, Mike and I committed to perform test outreach to investors, begin conversations with custody providers and OTC desks, and come back to the community with a revised framework.

Why Investor Relations?

In the course of our conversations, we’ve discovered the needs are a bit broader than “institutional sales.” That’s an important piece, but to maximize un-incentivized AUM, we need dedicated resources to meet institutional capital at their entry into DeFi, which requires the following:

  1. Institutional-grade investor relations materials
  2. A standardized and coordinated inbound and outbound institutional strategy
  3. Expertise in and hands-on guidance for making large purchases of our products from the time an institution allocates fiat to final execution.
  4. Targeted industry presence through education and awareness so we are top of mind for institutional investors entering DeFi (e.g. webinars, meetups/events, and other TradFi conversion targeted content)

We’re at an inflection point for DeFi, institutional awareness of the industry, and investor appetite for exposure. The Coop is receiving inbound interest in large institutional purchases. The Coinbase direct listing has amplified attention to the space and CNBC recently reported on the space. I have no doubt that it isn’t too early to begin building a differentiated approach to institutional capital that will mean we’re meeting the biggest bags at the door.

What will Investor Relations be doing in Q2 and beyond?

1. Master institutional custody and efficient buy execution

  • Develop relationships with custodians and OTC providers globally

  • List Index Cooperative products with custodians

  • Understand institutional custody well enough to answer institutional questions and to offer partner custodial solutions.

  • Build a core relationship with technology solutions like Fireblocks, which powers many custodian businesses.

  • Educate custodians on Index Cooperative products

  • Promote preferred custodial solutions (ideally for referral revenue) as requested by institutional investors

  • Ideally, run joint marketing campaigns to make custodian clients aware of new Index Coop products.

2. Provide high quality, institutional-grade investor relations materials

  • On Index Cooperative

  • On the Index Cooperative Product Suite

  • Maintain Investor FAQs

  • ETP Fact Sheets

3. Evangelize DeFi and other investment themes for institutional investors through education, awareness, and industry presence

  • Webinars (e.g., DeFi 101)

  • Conferences

  • Index Cooperative-hosted events

  • Industry panels

  • Twitter

4. Develop an inbound and outbound institutional strategy that is standardized across the team

  • Create and maintain institutions page with inbound form and other resources on Index Cooperative website

  • Developing and maintaining lead list of target institutional investors

  • Target family offices as a wedge strategy

  • Recruit/train/coach new IR team members

Conclusion

We’re especially excited about kicking off work on the conferences and panel side of things as parts of the world get a handle on COVID and vaccination. We’re working closely with a few leaders in the community and upcoming working group funding to make that a reality. More to share when we have it.

You can track the conversations we’re having in the IR slides on the weekly pitch deck. As ever, let us know if you have any questions or if you’d like to help out in any way. I’m @fallow8 on Discord and Mike is @metfanmike.

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This was an exciting read :clap: This data was top-of-mind for me as I read it


Source: Dune Analytics, h/t @jdcook

Misc notes

The top questions on my mind these days when it comes to growth initiatives are:

  1. How does this impact our North Star metrics?
  2. How does this help us hit the Q2-2021 goals?

It seems like the core hypothesis of investor relations is: “By improving investor relations in these 4 high-level ways, more institutional-level purchases of Coop products will occur.”

I’d be curious if you’d put it differently, or more sharply.

Questions

Of those in 4 broad initiatives & their sub-actions, what do you think you’ll be focusing on for the remainder of Q2-2021?

Why do you believe those are the right, or necessary, bets?

How will we know if we are successful? Curious to get whatever early thoughts exist here.

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Very excited specifically about the idea of the Webinars and panels.

Something similar came up in @Pepperoni_Joe 's new member brainstorm and I think if/when we do these educational meetings, we should record them and edit them into a backlog of educational videos. I’m happy to take the lead on this as these things get set up :+1:

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This is great stuff! I’m especially excited for us to become leaders in the conferences / webinar space. Your experience organizing these kinds of events will be invaluable for socializing the Coop and growing our reach.

I see IR growing into an absolute powerhouse for Index Coop. It is one of the most impactful use cases for the DAO model. If we want to consistently attract institutional grade investments we need to build out institutional grade capabilities.

@gregdocter raises some good points - we need to figure out the exact metrics we want to track for the different BD functions and hone down on some specific goals. With that said the approach outlines above is the exact approach we need.

Index Coop will be a $50 billion AUM organization within the next 5 years- we make that happen by having best in class relations with institutional size investors. @Metfanmike and @fallow8 are building a world-class team and I am excited to see it continue to evolve!

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Great post, and I am 100% in support of everything mentioned above.

I’m keen for us to coordinate on this. My reflections on the first new joiner session was that it should be split into separate meeting invites run back to back:

1. Introduction to Index Coop - pitching Index Coop and our index product to anyone interested (both contributors and investors)
2. Join the Index Coop team - targeted induction for those looking actively support the Index Coop as a contribution and community member

Those looking to involve themselves in the community would attend both call. Those just interested in investing in our product would attend only the “Introduction to Index Coop”.

Would you be interested in working together to develop this session? I’m keen to get your input on this “Introduction to Index Coop session” and reuse any existing content you have created.

Generally, I’m interested in getting involved in IR side (I have some experience with corporate sales of learning products) so this might be a good first step to help me get up to speed?

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@Pepperoni_Joe Simply put, it’s time. Hit me up on Discord @fallow8 and we will set up a call with Mike to get started.

This effort is transparently about Unit Supply(North Star/Q2 Goal) and AUM (Q2 goal). I think it will drive more holders, but that’s secondary. To prove by an extreme. If this effort got one holder to buy $150MM of DPI, we won. That’s not how it will happen, but I think makes the point.

I think you boiled it down well. My view is also colored by there being a race among DeFi protocols to meet institutional capital at the door. The Coop is uniquely positioned by virtue of being in asset management and taking a longer-term view than some others in DeFi. But that’s still just a flourish on top of “we do this, they buy more” that indicates there’s urgency.

We will push every single sub-bullet forward, but my energy and belief is behind “Master institutional custody and efficient buy execution” now and through the quarter. The relationships we’re building will open up walled gardens of capital and create more evangelists who speak to funds and institutions. In no less than five conversations, we heard some version of “Someone had asked me about DPI the other day…” or “a client was looking for a way to get sector exposure to DeFi.” It’s necessary for the Coop to facilitate big buys for them to happen, but this is also a trojan horse outbound sales strategy.

Briefly on materials and confernces/webinars this is mostly just how TradFi institutional capital engages. Everyone has asked for a deck so far. Otherwise, I’m just extrapolating from a decade of experience in ABS, Mike’s experience in private wealth, and others in the Coop who’ve validated that premise (e.g. @Lanks, @oneski22) Though I’d be open to hearing out why it’s the wrong approach.

Turning the mic over to @Metfanmike on this one, but I fully support the result. My summary is that it’s difficult and we hope to facilitate large buys that we know about and can celebrate but it may not always work that way. More fulsome from Mike:

"One of the core theses is that institutions are coming to DeFi (whether or not they know it yet). How does this happen? Through education and hand-holding on important matters like security. By generating awareness with folks that already have the ears of institutions. By speaking directly with fund managers, possibly by first getting them personally interested in the space. In short, being very loud and very attentive to institutional needs.

If we are successful with these top-of-the-funnel strategies, there will be more AUM, more (new) wallets holding Index Cooperative products, and higher average holdings in those wallets (i.e., our North Star metrics).

But tracking this is easier said than done. For example, we recently spoke with a crypto fund that after doing their due diligence with us, indicated they would like to proceed with a $2mm $DPI buy. Great. However, institutions value privacy and secrecy. They will aim to keep their addresses and therefore purchases completely private. They will be very unlikely to disclose whether or not they have bought.

This is frustrating, because it prevents us from getting a direct assessment on the success of the programs.

Our guiding belief though is that if we are everywhere institutional investors are (webinars, conferences, events, panels, etc), the AUM and the investments will come. Along the way we will get interested investors who will want to better understand how they can custody or trade Index Cooperative products, but many more will just proceed after finding out about DPI (via our various strategies) - without any direct conversation. If we are also pushing for more custodians and OTC desks to list DPI or make a market in DPI, we should expect the flows to follow. We should start to see an acceleration in AUM, an increase in the average size of wallets, and the number of new whales.

Curious to hear if you have any suggestions on how to make this better or measuring success more directly connected."