Fidelity Investments Buys Shoobx to Expand Private-Company Stock-Plan Business
Deal to acquire Shoobx is money manager’s first takeover since 2015
Fidelity Investments struck its first takeover in more than seven years, acquiring a stock-plan software company that caters to technology startups and other privately held firms.
Fidelity said Tuesday it bought closely held Shoobx Inc., which manages startups’ employee-equity plans and tracks their investors’ holdings from early stages to their initial public offerings. Terms weren’t disclosed.
Fidelity administers the stock plans of nearly 700 companies, most of which are publicly traded, and in 2021 forged a partnership with Shoobx to offer joint services to private companies.
“The acquisition was the logical next step,” said Kevin Barry, head of Fidelity’s Workplace Investing business. “We think this is going to be a key part of extending our capabilities and reach with private companies.”
Fidelity, one of the largest managers of corporate retirement accounts, is looking to extend its reach into a generation of companies in Silicon Valley and in other fast-growing industries that have stayed private longer and ballooned in value in recent years.
Big financial firms have viewed stock-plan administration as an early entry point in establishing relationships with those companies and their employees, who may turn to those banks and money managers for more lucrative services as their needs grow more complex.
In buying Shoobx, Fidelity joins other Wall Street heavyweights in looking to smaller upstarts to build out its stock-plan business.
Morgan Stanley acquired Solium Capital Inc. in 2019, adding a platform that specialized in privately held firms. It later bought E*Trade Financial Corp., which managed stock plans for hundreds of companies. In 2021, the bank struck a deal with Wilson Sonsini Goodrich & Rosati to take over the stock plans the law firm had managed for thousands of technology companies.
In 2019, Goldman Sachs Group Inc. participated in a $300 million funding round for Carta, another startup that provides record-keeping services to early-stage companies.
Fidelity, a private company itself, has rarely turned to acquisitions. Controlled by the Johnson family and run by the founder’s granddaughter, Abigail Johnson, the Boston firm has typically preferred to develop new businesses internally. Its last purchase, of wealth-management software developer eMoney Advisor, was in 2015.
The company’s latest deal comes as technology companies come to terms with a brutal selloff in growth stocks. The downturn has altered the IPO plans for late-stage startups and slashed the valuations of many more. “We’re taking a very long view on where the market is going and what the customer needs will be,” Mr. Barry said.
Founded in 2013, Shoobx has about 40 employees. The company has drawn investments from Scout Ventures and Atlas Ventures. The entire team will join Fidelity, said Jason Furtado, Shoobx’s chief executive and co-founder.