SoFi Launches Directed Share Platform for U.S. IPOs and Capital Raises, Powered by PrimaryBid

Rhea-AI Summary

SoFi Technologies, Inc. (NASDAQ: SOFI) and PrimaryBid Technologies Inc. have launched DSP2.0, an advanced Directed Share Platform for U.S. IPOs and capital raises. This platform modernizes equity program management, allowing companies to allocate shares to specific groups like employees or customers more efficiently. DSP2.0 offers a digital, streamlined approach with lower costs and no minimum account requirements, making it easier for companies to include non-institutional investors in their offerings.

The platform provides a cohesive investor experience, automated back-office processing, and integrations with marketing analytics tools. It aims to democratize access to IPOs and follow-on offerings, traditionally reserved for high net worth individuals. SoFi's CEO, Anthony Noto, emphasized the platform's ability to offer IPO shares to a wider range of stakeholders, from 10 to 10,000 people, through a simple smartphone-based process.

Positive

• Launch of DSP2.0 platform for more efficient management of directed share programs in IPOs and capital raises
• Expansion of SoFi's product offerings, potentially attracting more users and increasing revenue
• Democratization of access to IPOs for retail investors, potentially increasing SoFi's user base
• Partnership with PrimaryBid Technologies Inc., enhancing SoFi's technological capabilities
• Potential for increased revenue from companies using the platform for their IPOs

Negative

• Potential regulatory scrutiny due to broadening access to IPOs
• Increased competition in the IPO and capital raising space
• Dependence on a rebound in the IPO market, which is projected for 2025

Insights

Financial Technology Expert

SoFi's launch of DSP2.0 in partnership with PrimaryBid represents a significant advancement in democratizing access to IPOs and capital raises. This platform addresses longstanding inefficiencies in directed share programs, potentially disrupting the traditional IPO process. By enabling companies to easily include employees, customers and other stakeholders in public offerings, it could foster stronger relationships and align interests between companies and their key constituents.

The timing is strategic, with a potential IPO market rebound expected in 2025. This move positions SoFi as an innovator in the fintech space, potentially attracting more companies to use their platform for capital raising. The elimination of high account minimums and reduction in costs for companies could significantly increase participation in IPOs, potentially leading to more stable post-IPO performance as stakeholders are less likely to immediately sell their shares.

For SoFi, this initiative could drive user growth and engagement on their platform, potentially increasing revenue from trading activities and other financial services. It aligns well with their mission to provide Main Street investors access to sophisticated financial products, which could enhance brand loyalty and customer lifetime value.

Capital Markets Analyst

The introduction of SoFi's DSP2.0 platform is a notable development in the evolution of public offerings. By streamlining the process and reducing barriers to participation, this technology could significantly alter the landscape of IPOs and follow-on offerings. The potential for increased retail investor participation could lead to more diverse shareholder bases for newly public companies, potentially impacting price discovery and post-IPO trading dynamics.

From a market perspective, this innovation could contribute to revitalizing the IPO market, which has been relatively subdued in recent years. By making the process more efficient and inclusive, it may encourage more companies to consider going public, potentially increasing deal flow for investment banks and exchanges. However, it's important to note that this could also introduce new complexities in terms of investor education and regulatory compliance.

For SoFi, this move strengthens its position in the capital markets space, potentially opening up new revenue streams and partnerships with investment banks and issuers. It also aligns with broader market trends towards greater retail investor participation in previously institutional-dominated areas of finance.

New Platform Enables Companies to Expand Participation to Individual Investors in Public Offerings

SAN FRANCISCO & LONDON--(BUSINESS WIRE)-- SoFi Technologies, Inc. (NASDAQ: SOFI), a member-centric, one-stop shop for digital financial services that helps members borrow, save, spend, invest and protect their money, and PrimaryBid Technologies Inc., a leading capital markets fintech firm, today announced the launch of DSP2.0, an advanced Directed Share Platform (DSP) that offers a modern and streamlined approach to equity program management for companies looking to raise capital in the U.S.

DSPs allow companies to allocate a portion of their share offerings to specific individuals or groups such as employees or customers. However, since these solutions often require manual processing and don’t integrate well with other systems, they’re expensive and time-intensive to operate and limit investor participation to a select few.

With a potential rebound for the Initial Public Offering (IPO) market in 2025, SoFi’s offering brings equity program management, IPO, and follow-on offering processes into the digital age. It also gives issuers enhanced flexibility in raising capital by enabling them to involve non-institutional investor groups at scale.

SoFi’s DSP offers a cohesive investor experience, automations to minimize manual back-office processing, and expanded integrations with modern marketing analytics tools.

“For decades, companies have wanted to offer the opportunity to participate in their IPOs to the employees, partners, customers, and others who helped them grow,” said Anthony Noto, CEO of SoFi. “Unfortunately, traditional DSPs often have high account minimum requirements, carry significant costs to companies, and lack benefits to underwriters, limiting their appeal. SoFi now offers companies going public a turnkey, 100% digital way to offer IPO shares to employees and other people who helped build their business, and whomever else they want to direct the shares to, whether it’s to 10 or 10,000 people. People can open an account from a smartphone in seconds, transfer money seamlessly, and stay informed throughout the IPO process – with no costs or deposit requirements. At SoFi, we continue to provide Main Street investors access to products like alternative investments and IPOs, which have historically been reserved for high net worth individuals, helping more of our members get their money right.”

“Companies want intelligent, targeted investor inclusion at IPO to enfranchise those people who matter to their long-term success,” said Anand Sambasivan, CEO of PrimaryBid. “Until now, they've lacked tools to deliver this at scale with meaningful data, a problem PrimaryBid is solving globally. This solution for the U.S. market, combining SoFi and PrimaryBid's technologies, ensures regulatory compliance while removing the administrative burden from issuers and advisors when running a DSP. SoFi’s DSP2.0 lets companies shape their offer around strategic needs, not technical limitations.”

“It's vital to see innovation in the ways companies engage stakeholders when going public, and the market will welcome new technologies that modernize the IPO process as policymakers look to broaden investor participation,” said John Tuttle, former Vice Chairman for NYSE Group and expert on U.S. capital markets policy. “These advancements can strengthen our public markets and support the next generation of great American companies.”

For more information, please contact dsp@sofi.org.

About SoFi Technologies

SoFi (NASDAQ: SOFI) is a member-centric, one-stop shop for digital financial services on a mission to help people achieve financial independence to realize their ambitions. The company’s full suite of financial products and services helps more than 8.8 million SoFi members borrow, save, spend, invest, and protect their money better by giving them fast access to the tools they need to get their money right, all in one app. SoFi also equips members with the resources they need to get ahead – like credentialed financial planners, exclusive experiences and events, and a thriving community – on their path to financial independence.

SoFi innovates across three business segments: Lending, Financial Services – which includes SoFi Checking and Savings, SoFi Invest, SoFi Credit Card, SoFi Protect, and SoFi Insights – and Technology Platform, which offers the only end-to-end vertically integrated financial technology stack. SoFi Bank, N.A., an affiliate of SoFi, is a nationally chartered bank, regulated by the OCC and FDIC and SoFi is a bank holding company regulated by the Federal Reserve. The company is also the naming rights partner of SoFi Stadium, home of the Los Angeles Chargers and the Los Angeles Rams. For more information, visit SoFi.com or download our iOS and Android apps.

About PrimaryBid

PrimaryBid is a leading fintech firm. We build advanced retail capital-raising solutions for regulated financial institutions, enabling smart investor inclusion in public and private offerings globally. Our SaaS platform facilitates efficient investor access in IPOs, follow-ons, block sales, and corporate and government bonds, and transforms retail investor participation into a systematic and data-driven component of capital raising.

PrimaryBid has facilitated over 350 transactions for companies ranging from large-cap to SMEs across the UK, EU and U.S. Our technology ensures compliance while broadening access to regulated markets, allowing companies to include their most committed stakeholders in their capital journeys.

A partner to SoFi Technologies, London Stock Exchange Group and Euronext, PrimaryBid is backed by leading financial institutions and venture capital firms, including SoftBank, London Stock Exchange Group, Fidelity, Molten Ventures, OMERS Ventures, Motive Partners, Outward Ventures and Pentech.

Disclosures:

• Investing in an Initial Public Offering (IPO) involves substantial risk, including the risk of loss. Further, there are a variety of risk factors to consider when investing in an IPO, including but not limited to, unproven management, significant debt, and lack of operating history. For a comprehensive discussion of these risks please refer to SoFi Securities’ IPO Risk Disclosure Statement. This should not be considered a recommendation to participate in IPOs and investors should carefully read the offering prospectus to determine whether an offering is consistent with their investment objectives, risk tolerance, and financial situation. New offerings generally have high demand and there are a limited number of shares available for distribution to participants. Many customers may not be allocated shares and share allocations may be significantly smaller than the shares requested in the customer’s initial offer (Indication of Interest). For more information on the allocation process please visit IPO Allocation. This information should not be construed as a recommendation to buy, sell, or hold any security, nor is a recommendation or endorsement of any investment strategy.
• SoFi Invest refers to the two investment and trading platforms operated by Social Finance, LLC and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
  • 1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
  • 2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA(www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.

For additional disclosures related to the SoFi Invest platforms described above, including state licensure of SoFi Digital Assets, LLC, please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

• PrimaryBid Technologies Inc (“PrimaryBid”) solely acts as a communication services provider to broker-dealers in relation to securities offerings. PrimaryBid is not itself a broker-dealer and it does not itself effect securities offerings.

SOFI-F

View source version on businesswire.com: https://www.businesswire.com/news/home/20241002730071/en/

For SoFi: Meghan Brown | pr@sofi.org

For PrimaryBid: Mike Coombes | mike.coombes@primarybid.com

Source: SoFi Technologies

FAQ

What is SoFi's new DSP2.0 platform?

DSP2.0 is an advanced Directed Share Platform launched by SoFi and PrimaryBid Technologies for U.S. IPOs and capital raises. It allows companies to efficiently allocate shares to specific groups like employees or customers during public offerings.

How does SoFi's DSP2.0 differ from traditional directed share programs?

SoFi's DSP2.0 offers a fully digital, streamlined approach with lower costs, no minimum account requirements, and the ability to include a larger number of non-institutional investors. It also provides automated back-office processing and integrations with marketing analytics tools.

When is the IPO market expected to rebound according to SoFi's press release?

The press release mentions a potential rebound for the Initial Public Offering (IPO) market in 2025.

What are the benefits of SoFi's DSP2.0 for companies going public?

DSP2.0 offers companies a turnkey, 100% digital way to offer IPO shares to employees, partners, customers, and others who helped build their business. It allows for flexible allocation to 10 or 10,000 people, with no costs or deposit requirements for participants.