A company should try and know its investors, of course knowing each and every investor personally is quite a difficult and daunting task, but knowing their motives for investing is important.
The importance of investor relations stems from the fact that it can generate recognition and credibility for the company in the market, making it more attractive in the eyes of the investors and thus bringing in more capital. When a company develops a healthy relationship with the investor community it creates for itself increased access to capital.
Another attractive outcome of investor relations that companies aim for is liquidity. Through management of investor relations, the company continually updates the public on the profile of the company and in doing so, creates awareness.
The purpose of investor relations is not only to inform the investors about the happenings of the company but it is also used to help the company itself.
When companies show their knowledge of how their respective markets work and how they can benefit from the markets, the investors gain confidence in the company.