Raindance

Industry Sector: Audio & Web Conferencing

Background
Genesis Select signed Raindance in August of 2001. At that time, the stock traded about 125,000 shares a day, in a narrow range of $1.00 – $2.00 per share, for the preceding 12 months. The company had undergone a name change several months earlier, and had just emerged from a major reorganization. An earnings disappointment in early 2001 also hurt credibility on Wall Street. As a result, the company’s visibility on Wall Street and with the media had fallen considerably, with only two of the initial four underwriters writing research, and only one of those two maintaining a positive rating.In late summer of 2001, a number of pre-IPO private round investors were selling large amounts of stock (in excess of 10 million shares), as they began to close out positions that were no longer relevant to their business initiatives. With the stock below $1.00, concerns arose about NASDAQ delisting. A falling market cap was also hurting sales, as potential customers became increasingly concerned about the company’s long-term viability.

The Genesis Approach
The first order of business was to clearly and concisely redefine the compelling reasons for institutional investors to take an equity interest in the company. This included a review of the competitions’ strengths and weaknesses, as well as valuation comparisons. Additionally, Genesis sought feedback from other institutional investors regarding their perception of Raindance, and gave management guidance in fine-tuning their story and positioning their company.

The Genesis team quickly identified large potential buyers of the stock from their exclusive database of institutional investors and brokerage firms. We then systematically arranged for one-on-one and small group presentations with select major money management firms, and a targeted list of leading Wall Street research analysts around the country.

The Genesis Effect
By focusing on the strongest and most positive elements of the Raindance story, and effectively communicating the investment opportunity to an extensive yet targeted group of investors, Genesis was able to increase the company’s average daily trading volume by ten-fold, significantly increase their institutional shareholder base, and bring five new analysts on board, all in four months.

Complementing these quantitative improvements, a rising stock dramatically improved morale at Raindance, where most employees are shareholders, either directly, or via pension and profit sharing plans. Corporate viability also improved as a result of the increase in the market cap, greatly helping sales and marketing in gaining new customer wins. Previously, the low stock price was effectively used by the competition as a major reason not to do business with Raindance Communications, alleging the company was going out of business. The company is now perceived as a leading provider of web and phone conferencing services, and as a technology leader in this sector.