Virtual road shows increasingly are hitting the road as companies look to cut costs on giving presentations to venture capitalists, and individual investors seek a cheaper means of gathering information about investment prospects.
Full-service broker PaineWebber, along with MSNBC Desktop Video, recently premiered its first "Virtual Road Show," which allows portfolio managers and institutional investors from all over the world to tune in to financial presentations from the comfort of their PCs.
At a microcap equities conference in Houston, DSM Webcast presentations of more than ten companies. More than 4,000 people logged on to view the shows online, about eight times the expected number of participants.
"What [the larger-than-expected turnout] did was confirm that there is a demand for real-time information on these small companies," said Clay Womack, DSM's chief executive.
Company road shows traditionally have been open to a small, select group of investors. A pre-IPO company traditionally visits potential investors or gives a presentation at an investment conference, such as the upcoming Montgomery Securities conference.
Offering the presentation online, however, makes the information available to investors who otherwise would get shut out, and also saves them the cost of traveling to an investment conference, Womack said.
Indeed Womack noted that the biggest beneficiaries of online road shows are individual investors.
"Maybe an investor has $5,000 to invest. Chances are, that person would not travel to hear the annual meeting or presentation at a conference, but they would like to hear what the company has to say," Womack said. "People are making their own investment decisions, and now they can access information that Smith Barney and PaineWebber have access to."
Womack added that this gives individuals the same tools and knowledge about upcoming companies as fund managers and analysts.
Companies, meanwhile, are finding that the move toward virtual road shows greatly improves their ability to reach a larger pool of potential investors.
N2K, a company that delivers music programming and retail services directly to consumers online, recently offered its road show over the Internet. The company said that, because its business is conducted online, it was a logical next step for it to offer its road show online as well. N2K offered its presentation through MSNBC Desktop Video.
MSNBC Desktop videotapes a road show presentation, and then incorporates a company's slides to ensure that those watching the presentation online will have the same information as investors attending road shows offline. MSNBC Desktop Video, however, is not open to everyone, unlike the presentations offered by DSM. MSNBC's service allows only financial professionals issued a prospectus and password by the lead underwriter of the IPO in question to access its site and view a presentation. Audio and video included in the presentation cannot be downloaded or recorded.
DSM's presentations, however, allow viewers to send in questions via email that are then discussed during the show. DSM's site also posts and archives videotaped company presentations, including public offerings.
Tom Flavin, manager of DSM's virtual road show division, said it can cost a company $2,500 to $25,000 to take its road show online, depending on how many bells and whistles are included and how much bandwidth the company will need.
"It gets expensive for a small company to go to San Francisco and New York City to present a road show," said Womack.