Promoter Definition

What does a promoter do?

A promoter uses different methods to raise capital for a business. Many stock promoters use traditional stocks and bonds but may also incentivize partnership opportunities with limited liability or direct investment activities. The promoter may have discretion to incentivize as they see fit, or they may be authorized to make only specific offers. 

Types of promoters

When discussing the definition of a promoter, it is essential to note that there are multiple types of investment promoters. Here are some of the most common promoter examples:

Investment Promoter

An investment promoter provides information about specific investment opportunities to the attention of potential investors. The goal of this position is to identify capital that may be available for the opportunity that is being promoted and to secure the funds for a company. 

Government-Based Trade Promoter

Foreign trade is usually the primary focus of a government-based trade promoter. These promoters may be government agencies or other contracted agencies that help companies with international trade. One government-based trade promoter example is the United States International Trade Administration (ITA). 

Casual Promoters

A casual promoter has a much different promoter definition. These are not people who have a vested financial interest in the company. These are generally customers who believe in a brand or product, so they tell friends and family about the business. These are often loyal customers. Brands may choose to engage with these types of customers and encourage this type of behavior through loyalty programs or other incentives. 

Penny Stock Promoters

Companies that trade their stock for less than $5 per share may use penny stock promoters. These individuals generally support the cause of the company and work to help it increase its revenue through stock share sales. They may speak directly to potential investors to try and increase the price of the company shares. 

What is the difference between a stock promoter and a stockbroker? 

To be a professional stockbroker, you must have at least a bachelor’s degree and be licensed. Professional licensing consists of passing a series of exams administered by the Financial Industry Regulatory Authority (FINRA). 

Stock promoters do not have any licensing or education requirements. These individuals are not regulated by the Securities and Exchange Commission (SEC), but the SEC can investigate them if they overstep their bounds. 

How do promoters secure investments?

Many business promoters have a solid network of investors to turn to when opportunities arise. Here are some other ways that these promoters may identify and communicate with potential business investors:

• Cold calling potential investors
• Sending emails about the opportunity to spark interest  
• Preparing reports to demonstrate the potential investment value  
• Leveraging social media organically or through advertisements 

The definition of a promoter can change with the size, scope, and needs of the legal entity being promoted. This individual or organization helps raise money for an investment opportunity.