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Founder's Story
She Raised $650M by Fixing What Every Founder Gets Wrong About Investors | Ep 281 with Dannika Warburton Founder and Principal of Investability
00:22:50
In this episode, Dannika Warburton reveals how she went from working deep underground in Australian gold mines to becoming one of the most trusted IR operators in the small-cap world. She pulls back the curtain on raising A$650M+, building—and rebuilding—a company through crisis, and why most founders completely misunderstand how investors actually make decisions.
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Transcript22 lines
- [00:00]
A
Foreignica Warburton super excited to have you today and you have a very interesting story. It might be one of the most unique stories at least from somebody who's in the investment side but came from working in a mine. I don't, I don't know if I even know anyone that's actually worked in a mine before but I can only imagine the skills that that mining teaches somebody. So can you bring me back to that day when you, you used to work in a mine before you were investability, before you were the person you are today.
- [00:41]
B
Sure thing. Thanks. Thanks Daniel. It's so exciting to be here speaking with you. So yes, I guess being an Australian and you know, in an economy that's driven by natural resources. When I was at university during my breaks to get a bit of money I would go and work on the mine sites which was absolutely fascinating to be honest. You know, if you've never been underground in a, in a large gold mine, which I'm assuming you haven't, it's just another world. It's like the, you know, going to the moon or something. But it was an interesting of exercise that I did over that three or four years in the breaks while I was at uni and I guess by virtue of being a West Australian my family was in the mining industry so I was lucky enough to be able to do that. But it really set the foundation of what investability is the company that I lead because a lot of the companies that we support are listed on the Australian Stock Exchange, they're small caps and by virtue of the composition of the ASX that means that a lot of them are actually mining companies. So I didn't actually work on the mind sort of full time after uni I got into investment banking and sort of did the rounds there. They got their pound of flesh for me. I worked for a US bank actually and then after that moved into sales and trading for a Canadian bank. So sort of got the full spectrum of deal structuring and, and how these really transformational sort of corporate deals get done with an Australian focus. So yeah that set the foundation and I guess it's a pretty unique mix for investability to sort of have that origin story. But I suppose the real aha moment for me before founding investability was I consulted to a digital investor relations firm for just about three months and while I was there it was like upside down land, this agency. The culture was super toxic and in the three months that I was there I kind of leveraged my relationships that I had and bought in about 800 grands worth of new business. And I thought I kind of had two realizations I suppose. The first was that I can do this and do it better than these people. But also secondly that I really wanted to build a business that had a great culture. So that's what I did. I was living in Sydney at the time. Founded Investability right as the COVID pandemic kicked off. But that was actually the perfect time to have started an investor marketing agency because we just were entering a bull market and so, you know, went from about one client to 45 clients in the space of about 12 months and did about 14 IPOs that year. So really built the plate as we, we flew it.
- [03:40]
A
It's a very commonality, It's a lot of commonality, I'd say between what you're saying and other successful founders as well, where you had experience in an industry, you're able to take that experience into the industry that you, that you found the company within. At the same time you work for somebody and then you realize why am I working for someone when I can literally do this on my own? And I love that. I think, I think that's, you know, it's such a great start because you have experience, you're already working in it. Which is why I always find it's super helpful for people to work a corporate job. Like you said, gain, gain what you don't want to do, like find leaders that you don't actually want to emulate and then you bring that to your own company and say, I'm never going to do that, but it helped you really craft this thing. So you, you've helped raise over, over a billion Australian dollars. What is one thing that you find that founders misunderstand about raising money?
- [04:38]
B
I think from our perspective of when we're assisting companies going through a capital raise or a funding round, that they're really quite focused on the technical details or the numbers and they may miss the fact that it's not necessarily the numbers that moves the market, it's the narrative. You. And so crafting a narrative that is an investable story and that is going to be compelling to an investor is really important and something that often gets missed.
- [05:09]
A
I find and I imagine within this you're pitched by many founders or I'm sure you've, you know, a lot of people want to talk to you about investing. I know everyone I know that's looking for money is like always, you know, talking to hundreds of investors. And I can imagine being on the investor Side, it can get quite overwhelming. But what would you say is a successful pitch? So if somebody comes to you or if there's maybe one that stands out where you were, like, wow, like that really got me compared to these other 50 that I've heard that I probably will pass on.
- [05:44]
B
I think it's about a simple story. So kind of what I was just saying before about things getting over complicated. The best stories that I've heard are ones where the company, the CEO or the chairman or whoever's presenting comes with three key points that they want you to walk away with. So, you know, and I guess that's because the human brain loves the power of three, you know, three wise men, three blind mice. It's kind of how we've grown up. It's the best number of investment highlights to use for the brain retention or memory retention for investors. But there are multiple factors that I think make a compelling story. So one would obviously be the context of the sector, the industry that the company's in, and then secondly, really honing down the story to make it super punchy, like what is it that investors should sit up and take notice about? So that's what we do at investability to help these companies get noticed by investors, both on the institutional side and the retail side. So can be quite complex, making the story weighty and technical enough to I guess, facilitate the institutional investors and what they're looking for, but then also simple enough to understand for just, you know, a mum and dad investor.
- [07:09]
A
Do you find when you give feedback to these founders, because I know you're helping them raise the money, right. And if you give them feedback, are they open to it or are they, you know, like, hey, I'm the founder, I know everything.
- [07:28]
B
I think with us we found that they really treat us like a trusted advisor. So they take on the feedback. They know that we're aligned with them, we're trying to help them and it's our specialty. So a lot of the MDs or the founders that we work with come from a technical background. So for instance, if we're working with say a mining company that's developing, I don't know, a big copper mine or something like that, their expertise is probably going to be in sort of mining engineering or geology, not necessarily in marketing, communications. So all or the media side. So I think they do come to us. And if we're giving feedback, we always do it in a really warm and supportive way, of course. But they know that we're trying to help. So I think they're Always receptive to hearing positive feedback that's going to help them get their investment so they can go and make a difference by bringing their company to life.
- [08:35]
A
Yeah, it's always good to have. You need that trusted partner, that trusted advisor. I remember a moment in my business where I had this pos, like a deal was handed to me and it was going to be like life changing, business changing. And I messed it up and I lost the deal. And it really was my own fault. And it was, you know, insecurities. It was early on and I. It was just so. It felt so overwhelming to me, like, okay, I don't know if I can handle this or what if I mess up and. And I look back like, wow, you know what? I learned a lot. Even though I missed out on, you know, a substantial amount of money, I really learned a lot. Did you ever have any of these aha moments for you where it didn't go as smooth as you wanted, but it was one of those hard lessons that you needed to learn?
- [09:19]
B
Well, I totally agree with you that the most painful things that happen are obviously the best or usually the best teachers. I've had many challenges, like I think most founders would things to overcome. And to your point, around limiting beliefs, I think one of the things if I was going to go back to sort of six years ago and tell my younger self, you know, dealing with stress and the limiting beliefs of that you get wrapped up in that you can't do something or that you know, something's going to fail. I wish I had learned more about neuroscience back then. I mean, I just read this fantastic book about the alter ego effect by Todd Herman, and that's actually been game changing. Probably a little bit off topic, but I think if you can create a character, give it superpowers and then press play, you know, it's just. It's amazing. Embody this. If you're a procrastinator, for instance, embody. Build a character around someone who just gets stuff done. If you're a real stress head that can't. That sort of gets really overwhelmed and frazzled. Build a character that is super cool, you know, relaxed, nothing phases them and just executes with, you know, with. With good humor. So. So I think that's sort of something interesting that helps me to overcome challenges or times when I'm feeling that it's all too hard and it's, you know, what am I doing? You know, those sort of moments. One particular time where things were going really, really well and I guess I didn't read the signs or, you know, you always have this intuitive sense. And I think if you're guided by your intuition, then everything's going to go okay. It's when you don't listen to your gut feelings that things go awry. So this is a time when basically there was, I think we had 10 employees sort of all resigned within a month and we had to drop clients. And it was one of those times we kind of feel like giving up. But everything has a silver lining. And if you have that growth mindset that you can see the benefits of something bad that happens to you, I think that's a really positive trait and something you need to have as a founder to be resilient. But it allowed us to restructure the business, really scale back the operations to make them lean started. It was sort of the time when, well, it's a little bit before AI became sort of as commonplace as it is now, but just we built better systems. Like the investability was so much better for it. So I think, yeah, I think when you go through a hard time, just always know that there will be something good coming from it and what can I learn and how can I do better next time? That's really all you can do. I think.
- [12:10]
A
You have to build that superhero. I like that. You have to. You have to build that superhero in that moment to tell yourself like things are going to get better because they always do. But it's so hard when you're standing in the mud. It's really, really hard not to envision your feet falling deeper into it. If you could change something about the small cap world, and I don't really know a huge amount about it, so thank you though, for filling me in more today. But if you could change something about it, maybe make something better, what would that be?
- [12:40]
B
I think when we're dealing with the small cap companies, so small cap company is any company under about a million market cap. So these companies are often run by small teams. And I think the thing that they may, you know, do wrong often, I'm not saying all the time, but a lot of the challenges that we see when we are engaged by a company to assist is that they. There's a bit of information asymmetry out there in the market. So maybe they're not communicating as effectively as they could with their shareholders or with their investors. Maybe there's some perception issues that need to be overcome by the people that, you know, investors may think that a company's management team isn't supporting their shareholders in the way that they, they want to be supported and all of this we've found we can overcome. We've turned negative sentiment into great sentiment just by communicating with shareholders. So I think that's really important. Reducing the information asymmetry by just communicating more. And some of the things that we do like you know, investor webinars where we'll get on and have sort of 100 or 200 people on these calls, investors on the calls and give them the opportunity to ask two way questions. It just builds I guess, trust and credibility in the, in the management teams that they're the right steward for the ship, that's aligned with shareholders and going to be taking the company forward in the best interest for shareholders and investors. So I think that's probably the main thing in the small cap space is about sort of getting the doing sort of best practices, promotion and I'm not really sure, I guess a lot of these companies as well because they've got lean teams, you know, things get missed and that sort of thing like so I always think when you're, you know, you're working as founder, you've got to, you've got to do the hard work, everything should be results orientated but you've also got to be like a good human that people want to work with. So it's about, you know, the small 1% actions that will move you forward. I mean personally I don't believe in line, you know, life work, life balance. I believe more in alignment. So building a team around you of people that are, you know, supporting the cause and that have your back and that will, you know, step up to the plate and be a good trusted advisor in our sense, in our role and also as well, I don't think that when you're, I don't think that anyone wants to hear about the labor pays, right. But they just want to hear about the baby. So being results orientated, executing well, communicating with the shareholders and investors and keeping people up to date and then doing it with good energy. I think that's sort of the formula that all small cap founders should roll with.
- [15:36]
A
I was just listening to Jeff Bezos talk about how he doesn't believe in balance, but he believes in harmony. And I like what you said, which I think is along the lines of the alignment. Going back to something you said early on was around when you worked in that corporate job. It was a very toxic environment and I imagine normally that's driven through top down leadership. So what is something within leadership that you've learned along the way that you're like, okay, I'm either never going to do this or I'm always going to do this.
- [16:09]
B
Well, people want to work with good people. So. So we know it's often quoted that you've got to build sort of the A team and then the A team's going to attract more of their A team fellows to join the business. And that's how you scale your human resources or human capital component. And I think it's also true from the client perspective that people want to work with people that they like and trust and who are easy to deal with. So I think that's pretty simple formula in terms of leadership and building a team. But also I probably wasn't the best leader to begin with. It's not one of my strengths at all. So it's something that I've had to sort of learn and carve out time to really build the culture and a team spirit, I suppose. But always having had that past experience that I talked about where I worked at that toxic place, and it definitely was driven from the top down. I mean, the, the MD was, you know, having an affair with one of the account managers. I think that sort of set the tone for all the other sort of things that happened there. But when you see something that you don't like, it is a real impetus for doing something differently. And so that's why it's been so important to me to build investabilities culture based on warmth and being a good person doing a good job. And I think our sort of results speak for themselves in terms of the clients that, you know, work with us that we've retained for a long time and we're at the premium end of the market as well. So kind of shows that people just want to work with people who are the best or doing a, doing a good job and do it with good grace and good energy.
- [18:01]
A
I'm learning from you that being a good human is really pays off not only just being a good human being likable to other people, and also communication. It's pretty wild how so many relationships it could be friendships, business partnerships, client relationships are ruined because of a lack of either a lack of communication or just people don't really understand how to communicate. And I think that's partially because we're not really taught like school doesn't really teach you how to communicate. Right? It teaches you how to like add a, add one plus one equals two. But we're not learning the. I don't know if it's a soft skill or hard skill. I Forget eq. I know, I think it's an EQ thing. I'm blanking. But it's like we're not learned those skills. I think it's a soft skill. We're not learning like the soft skills to actually will benefit us, especially when it's like the business world. But maybe, maybe we need an MBA or we need to, we need to learn the neuroscience, we need to read these books and we need to build are superhuman. We need to build that into ourselves and we're going to be better. But. Danica Warburton Founder of Investability if people want to get in touch with you, they want to find out more information. Maybe they're a small cap or they want to become small cap. How can they do so?
- [19:17]
B
Oh, we'd love to hear from them. So you can reach out via our website, which is probably going to be linked to bestability.com au or via LinkedIn. We've got Investability IR on LinkedIn and we've also got a YouTube channel so they can check out our videos on Investability tv.
- [19:35]
A
And what do you. What is Investability tv? Tell me about that.
- [19:38]
B
Well, it's our, it's our platform where we host all of the, all of the various investor events, some highlights from investor events, panels that we've spoke on, investment panels, the interviews that we do with our square solicited clients and webinar replays and, and the like. So lots of information there, very much investor focused and we give you more of a sense Dan on the asx small cap space for sure.
- [20:06]
A
I'm going to learn. I'm going to be like it. I'm next time you come on this show I'm going to be like a pro about learning about the. I didn't even know. I don't know too. I don't do too much of the markets, especially outside the US I am a little ignorant in markets so I'm glad I'm learning. I actually have a final question though. How do you see the importance of basically what you're doing is media creation, right? And I don't know if you're familiar with A16Z the VC firm, they just launched this whole thing where they're trying to incubate what they're calling new media, which is essentially right. Like they've done a great job of media creation among, among investment firms or corporations. So how do you see this playing out in the future where like for example, the clients of yours, they need to create some sort of media like creating this media presence Online might be either. Is it going to be mandatory for every company you know is only, you know, are a few companies going to win? Do they need to be a certain size? Like how do you see this playing out in the future as like content creation, storytelling just becomes more of a thing?
- [21:16]
B
Well, it's a great question actually because I was just speaking to someone about we've got a couple of clients going over to London for a conference and so we've put together a presentation investor deck pretty much. But really I think that video is the new investor presentation. People are so investors included. So attention deficit these days. If you can tell your school, your, your story in a two minute video rather than having someone have to read through a 25 page slide deck, then they're going to choose the quick two minute video. I think it's incredibly powerful and the way that everything is moving, I will say that it's very, very crowded space. It's really hard to stand out. And obviously, as you know, making compelling content takes a lot of time and energy to make it high quality. But it's so powerful when you get it right. And I think the companies that do commit to investing in new media will outperform 100%.
- [22:17]
A
Danica Amazing. Thank you so much for joining us today on Founder Story. I learned a lot and I always enjoy having people from all around the world because I think sometimes we get stuck in a bubble in the small place we are and then we're not really sure about what else is happening in the world. But there's so much, it seems like there's so much opportunity now in front of us that we all can really win. So thank you for all that you do to help other founders as well.
- [22:43]
B
Thank you so much for having me. It was so great to chat to you.