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Social media opens up investment

Large corporate investors have a preference for capitalising on social media, with significant shares in the likes of Facebook and Twitter held. More than this though, institutional shareholders are also using the platforms to drive other investments.

That is the overriding conclusion from a recent report by financial services firm Greenwich Associates. In its recent  ‘Institutional Investing in the Digital Age: How Social Media Informs and Shapes the Investing Process’ paper, it found that following posts is potentially worth billions to the investment market.

The report stated:

“Almost 80% of institutional investors use social media as part of their regular work flow, and approximately 30% say the information consumed via social media has directly influenced an investment decision.”

Despite the apparent nature of the trend, it still serves as a timely reminder to start-ups and small businesses. This is particularly relevant as they execute exit strategies to spin off into new companies, or while seeking funding or attracting a buyer. In fact, 34% said that information taken from social platforms drove their decision about who to work with.

The report also found that 48% of respondents said that information taken from social news feeds instigated new research and investigation, which investors and new industries should take note of. Meanwhile, 37% claimed that it was useful to share information with their institutional contacts, while 33% said it started discussions with investment consultants.

The author of the paper, Can Connell, who heads up the Market Structure and Technology department at Greenwich Associates, said:

“These results show that social media is influencing decisions that can result in the allocations of billions of investment dollars around the world.”

Connell went on to claim that in the next twelve months, 40% of global organisations are also looking at increasing their exploitation of social, which could mean that it would hold even more influence than it does already.

Richard has a First in English Literature and Creative Writing, and has experience writing fiction and short stories (which he has published both online and in magazines).

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