Back in January, we wrote about. the fintech company Plaid‘s decision to cancel its deal to be acquired by Visa. The reason? The company was too young, ambitious, and antsy to wait for the rusty wheels of regulatory oversight and approval. Or such was the reasoning shared by Plaid co-founder Zach Perret.
San Francisco-based Plaid essentially provides, through APIs, the infrastructure that allows consumer fintech platforms doing debit transactions to operate. This includes the likes of Venmo, Acorns, and Betterment. And they provide the insights that flow from all the consumer data that flows through Plaid.
The Department of Justice saw the deal as a ploy by Visa to take a potentially formidable competitor off the field. Plaid and Visa of course objected. But Plaid ultimately viewed sticking around and waiting for the case to wind its way through the justice system as a big lose-lose. Hard pass. Moving on.
Zach shared the company’s reasoning in a blog post. “Unfortunately, the pace of a multi-year regulatory review is not compatible with the fast-moving realities of a startup – and delaying close another year or more is not in the best interest of our customers, the financial system, or consumers themselves.”
Translation. “We don’t have time for this sh*t.” He also shared the news on Twitter.
Blue Chip Backers
Fast forward to yesterday. Zach published another blog post. This one announced a $425 million Series D round. The funders included a combination of new and existing investors. Many of them among the top names in Silicon Valley venture finance. Altimeter Capital, Silver Lake, Ribbit Capital, Andreessen Horowitz, Index Ventures, Kleiner Perkins, New Enterprise Associates, Spark Capital, Thrive Capital. Yada, yada, yada.
There is often wisdom in waiting. And in saying no. This certainly seems to be the case for Plaid. This new round values Plaid at $13.4 billion. That well more than 2X the $5.4 billion Visa agreed to buy Plaid for back in January 2020. And the round also roughly doubled the amount the company has raised since its 2012 founding.
To hear the founders talk, Plaid’s mission goes way beyond helping popular financial apps conduct transactions. Fintech is about democratizing finance. Unleashing financial inclusion. Or as Zach describes it, “Not only have most of our financial interactions moved to the web, but the number of people that have access to high-quality financial products has massively increased. Digital finance is everywhere, but the true transformation is still ahead of us.”
Zach is right, And the ecosystem Plaid is empowering illustrates his point. Apps like Acorns and Betterment allow consumers to make small incremental investments that were not possible just a few years ago. Plain is the plumbing that makes the fintech revolution possible, And tangible for consumers snd small businesses. Plaid also provides the payments infrastructure behind a number of small business-focused SaaS tools. These include Expensify, Wave accounting software, Justworks HR software, and others.
Given where the company sits today, it’s hard to imagine the founders not being extremely pleased with their decision to walk away from the Visa deal.
So what’s next for Plaid? Basically, the company needs fuel to scale. And quickly. Now it has plenty of it.
“Plaid is focused on creating a single, integrated platform focused on helping innovators build digital financial products. Doing so requires scaling to meet the increased use of fintech, expanding globally to meet international demand, and delivering an expanded set of platform products to our customers.,” Zach said in his post. “This will include continued investment in APIs that help people connect a complete view of their finances, as well as tools and services to support enhanced privacy, personalization, decisioning, and automation.”