Plaid

Plaid, a fintech company founded in 2013, offers APIs designed to connect third-party financial applications to banking services. Consumers use such integrations to plan their spending, manage savings, and control investments. In particular, Plaid serves Mint and Acorns budget planning applications and Venmo money transfer application.

History

2021

Raising $425 million in investments, estimated at $13.4 billion

In early April 2021 financial that-startup Plaid raised $425 million as part of the Series D funding round. The investment round was led by venture capital firm Altimeter Capital. The capitalization of the American startup is $13.4 billion.

Existing investors also invested in Plaid, in particular Andreessen Horowitz, Kleiner Perkins, Index Ventures, New Enterprise Associates, Spark Capital and Thrive Capital, as well as two new ones - Silver Lake and Ribbit Capital.

Fintech company Plaid raised $425 million, its estimate was $13.4

According to Zachary Perret, CEO of Plaid startup, the funds raised will be used to scale the business. The startup plans to increase the number of employees and expand the line of existing products.

Perret noted that in 2020 the number of Plaid customers increased by 60%. In the first few months of 2021, the startup expanded the staff by 20%, by April it employs about 650 employees.

Plaid technology allows you to connect your bank account with fintech applications such as Venmo, Robinhood and Coinbase, whose popularity during the COVID-19 coronavirus pandemic has grown sharply, to process transactions through the application's software interface. Plaid noted that in 2020, Google and Microsoft added to the list of customers.

Plaid CEO also noted that the startup does not plan to place its shares on the public market in the near future, but entering the stock exchange is part of Plaid's long-term development strategy.

This year we achieved significant success in the UK and Europe, the list of our customers included large British fintech companies such as Curve and Atom. However, Plaid still has something to work on, especially in Europe, "said Kate Grose, head of Plaid in the UK.[1]

Visa refused to buy Plaid

January 12, 2021 it became known about the final refusal of Visa to buy the fintech company Plaid for $5.3 billion due to an antitrust lawsuit of the US Department of Justice. The agency asked the court to block the transaction, since, according to the authorities, it will help the buyer illegally maintain a monopoly in the field of debit online payments.

Plaid and other future financial technology innovators are free to develop potential alternatives to Visa's online debit services. With increased competition, consumers can expect lower prices and better services, "said Makan Delrahim, chief officer of the antitrust department of the Ministry of Justice, whose words are quoted on the ministry's website. According to him, the cancellation of the transaction is in the interests of consumers.

Visa refused to buy Plaid due to an antitrust lawsuit by the US Department of Justice

As a result, having failed to get the approval of regulators within a year after the announcement of the transaction, Visa management decided to refuse to buy. Instead, Plaid will become an investor in Visa and will continue to work with the payment giant as a partner. The details of cooperation by January 14, 2021 are not disclosed.

Initially, Visa management wanted to challenge the lawsuit of the Ministry of Justice, the court was scheduled for June 2021, but subsequently Visa and Plaid made a joint decision to terminate the merger agreement.

We are confident that we would win in court, since the capabilities of Plaid complement the capabilities of Visa, not being competitive. We are convinced that the merger of Visa and Plaid would lead to significant advantages... However, a whole year has passed since we first announced our intention to purchase Plaid, and it will probably take a significant time to fully resolve protracted and complex litigation, "Visa CEO Al[2] said in a press release[3]

2020: Visa buys Plaid for $5.3 billion

On January 13, 2020, Visa announced the acquisition of Plaid for $5.3 billion, double the company's valuation two years earlier. The deal is planned to close in 3-6 months after receiving approval from regulators.

Visa believes that this purchase will help the company take the business to a new level and expand the existing payment system.

Visa bought a software developer to connect fintech services with banking services for $5.3 billion

After the close of the transaction, Plaid will operate as an independent company, which is part of the Visa group. At the same time, the startup will use the Visa brand, its resources and international reputation, the press release said.

Before the sale of Plaid was announced, the company raised a total of $353.3 million in investments. Among the investors were Visa and Mastercard.

The cooperation between Visa and Plaid will put us in the epicenter of the fintech world, expanding our common market and accelerating the long-term income growth trajectory, "said Visa CEO Al Kelly, commenting on the purchase of Plaid.

It is assumed that the transaction will allow Visa to strengthen relations with large banks, which are reluctant to provide access to customer accounts for security reasons.

By the beginning of 2020, one in four bank customers in the United States (without knowing that) uses Plaid technology to integrate their bank accounts with more than 2,500 digital financial products. The service works with 11 thousand financial institutions in the USA, Canada and Europe and has connected more than 20 million accounts.^[4]

Notes