Fidelity’s Foray Into IPO Prep To Also Boost Retirement Biz

(originally published in

By Beagan Wilcox Volz

July 21, 2021

Fidelity on Wednesday unveiled a new offering that it has developed with start-up Shoobx to provide services for private companies at all growth stages, including preparations for an initial public offering.

Shoobx, pronounced “Shoebox,” provides equity capitalization tables and manages legal information and other data for private companies, including ones working toward an IPO. The services Fidelity brings to the new offering complement Shoobx’s, the companies said in an announcement, and include company stock plan and retirement plan administration.

Many start-ups change products and services at each stage of growth, which can mean disruptions to key processes as well as significant outlays of time and money, the announcement noted.

“The Fidelity/Shoobx offering fills a critical gap for entrepreneurs by providing a flexible solution that grows with the company and eliminates the need to implement new platforms as a company expands,” the announcement said. Some 1,322 companies went public globally in 2020, a record number, Ernst & Young reported. Nearly 300 of the IPOs were in the U.S. That momentum continued in the first quarter of this year, with 597 IPOs worldwide.

Fidelity’s agreement with Shoobx does not include a stake in the start-up, said Mark Haggerty, the asset manager’s head of stock plan services.

Fidelity has administered company stock plans for about 20 years, but in the past two years private companies that eventually go public have made up a growing part of that business, Haggerty said.

The gross market value of stock awards on Fidelity’s platform is $435 billion, a spokesperson said. Fidelity has 585 such clients. It added 86 of those last year and 84 of them during the first six months of 2021, the spokesperson wrote in an email.

“There’s a thousand firms that are … sizable private companies that are probably within a couple years of going public,” Haggerty said. “Those thousand firms we would not have gone after in the past, and now this collaboration with Shoobx allows us to come after them.”

More than three-quarters of Fidelity’s stock-plan clients also tap the firm to serve as the recordkeeper for their retirement plans, he said. “Our view is it’s better to get in earlier with many of these companies so that we can help the companies grow and develop, and so we can help their participants as they’re growing and developing,” Haggerty said. “The sooner we can start to help, the better.”

Fidelity is the largest U.S. retirement plan recordkeeper, with nearly 20 million participants and $2.47 trillion in assets on its platform, according to the firm.The private companies that use the new Fidelity and Shoobx service will use stand-alone 401(k) plans and not Fidelity’s pooled employer plans, Haggerty said. The private companies that the two firms are targeting are bigger than those that have signed on for PEPs, he added.

In addition to capitalization tables, the new offering includes a data room for confidential business information that potential investors can view; data modeling that gives companies possible “next round” investment planning and exit scenarios; and board management tools, according to the announcement.

Shoobx, also based in Boston, has more than 10,000 users, according to the announcement. The eight-year-old firm has 35 employees, a Fidelity spokesperson said, and is currently hiring.

Fidelity brings to the product a suite of employee benefits, including student debt repayment options, charitable giving programs and retirement plans, the announcement stated.

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