Pre-IPO pedia | After a scrapped merger with Visa, $13.4B Plaid has reached three times the acquisition price
We often use an average of 3-7 financial applications, such as Paypal, Stripe, Venmo, Current and so on, each of which connects to different banks.
About a quarter of US citizens with bank accounts use Plaid. More than 11,000 banks and financial services companies in Europe and the US, as well as more than 2,600 financial technology developers trust Plaid.
It can provide services for developers to easily allow users to log in to bank accounts in the app without having to develop all the infrastructure themselves.
Visa announced it was intending to acquire Plaid although the eye-catching deal failed finally. What's the charm of Plaid's business model? IPO Buzz will takes you to the story of Plaid.
William Hockey was born in 1989 and graduated from Emory University with a degree in computer science.
Zach Perret was born in 1988 and graduated from Duke University.
William Hockey spent a summer interning at Bain where he met his future co-founder Zachary Perret.
The pair originally attempted to build consumer financial management products, including budgeting and book keeping software.
When confronted with difficulties in connecting bank accounts required for these tools, they decided to pivot their core business focus to a unified banking API.
Plaid builds a data transfer network that powers fintech and digital finance products.
From the consumer side, this means they allow common apps such as Venmo and Chime to offer banking services without having to develop all the infrastructure themselves.
For immediate linking of their bank funds, users of the apps are required to share their bank login credentials with Plaid.
For some banks, Plaid will not receive user credentials and instead users will authorize access to bank data through their bank's portal.
Plaid believes data security is important. It uses security measures such as data encryption, strict authentication, monitoring systems and third-party security reviews to achieve industry-leading standards.
Since its inception, Plaid has experienced six rounds of financing, with major investors including Goldman Sachs, JPMorgan Chase, Spark Capital, Silver Lake, Index Ventures and Andreessen Horowitz.
Several actions that are highly concerned by the market include:
On June 19, 2016, Plaid received a $44 million B round of financing led by Goldman Sachs and others, with a valuation of just over $200 million.
In January 2019, Plaid acquired competitor Quovo for $200 million.
In August 2021, Plaid completed its D + and D + + rounds of financing, with investors including JPMorgan Chase.
In January 2022, Plaid announced it had acquired the identity verification and compliance platform, Cognito, for an undisclosed sum.
Plaid's valuation has grown since its inception, reaching $13.4 billion in Series D funding, making it the Bay Area's largest unicorn.
Plaid has disclosed its profit model on its official website, and its revenue is divided into two parts:
Part of it is paid for by the app when it connects users to their bank accounts, and most apps pay a one-time fee;
Another part of the revenue is that users pay to Plaid every time they access their account to make a transaction; for example, every time they use Venmo to transfer money to someone.
According to KlipC analysts, the number of Plaid's affiliated accounts is growing rapidly, with a compound annual growth rate of 115% from 2015 to 2019, exceeding $200 million in 2019.
Plaid declined to comment on its revenue. But it is undeniable that the outbreak of Covid-19 has greatly accelerated the development of Plaid.
According to data from KlipC, Plaid brought in about $100 million in revenue in 2019, mainly through institutional customers.
According to some information, the company's annual revenue will reach about $170 million in 2020.
On January 13, 2020, Visa announced it was intending to acquire Plaid for $5.3 billion.
Visa later abandoned the deal after opposition by the United States Department of Justice due to data privacy, antitrust risks and monopolist reasons.
The failed Visa merger was a lucky break for Plaid, which further stimulated user growth in the enterprise and individuals segments of Plaid.
In January 2021, there was speculation that the company might go public through SPAC.
In April 2021, after raising $425 million, a person familiar with the matter said that They're not going to sell to a SPAC, Plaid can be independent for a long time. That’s a lot of money for them.
Plaid declined to comment on the listing. But judging by all the recent rumors, Plaid shouldn't be far away from going public.
Mooers, have you ever used Plaid? Are you optimistic about Plaid's business model? Would you invest in the Bay Area's biggest unicorn if it goes public? Follow me to join the latest discussion!
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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fair-minded Chupacab : I haven't actually heard about Plaid before so no, I have not heard of it, and don't understand what problem it is trying to solve.
151280848 : how to buy and trade this share ?
70832332 : most people used plaid to connect bunch of bank accounts to digital wallet/cash back portal like venmo/dosh. Thus most people joined the class suit against plaid. the model，which connect varies banks and platforms，is ok as long as credentials are secured，and instead of collect those cr‘s，simply perform as a “connection”
diesomniadotcom : I have used it a lot. It makes using a budgeting app or a financial app to keep track of all your accounts in one place very convenient. Of course you have to be willing to put a lot of trust in applications like that. All I know is it works, and I have had no security issues the last few years so, so far so good!
ABCDWXYZ : Very high valuations
71571631 : whats stocks name?
fair-minded Chupacab HereForTheTrades: thank you for enlightening
Sprockett : I have used plaid and issues. I have had direct experience with the first of which is Moomoo/FUTU, nor EastWest bank utilize Plaid as I tried just days ago to link my primary bank and Moomoo, but it was not possible. Secondly, I utilized 2 factor authentication with a dynamic security token, and it was not possible to link accounts. The issue is the token; however, Plaid does not allow for credentials that go beyond the username and password.
that for me is a security issue I am not willing to overlook. I used a dynamic token on all my holding accounts and plaid is not equipped for this level of security.
Until this hurddle is overcome, I do not see Plaid ablevto live up to the hype.
Sprockett HereForTheTrades: I am sorry, plaid has nothing to do with bounced checked or the costs associated with processing debit card transactions.
Plaid simply links Apps like Cash App, venmo to your financial institution to help you transfer funds between your App and your bank.
Interesting fact all these Pps like Venmo, Cash App, and Dave App, all are relatively new. There is an original that doesn't require all this linking and craziness, they have been in business for over 20 years and have built a reputation on security and the name is PayPal.
Trust me when I say the more gadgets you have linked to your bank the greater the risk. as I stated before Plaid doesn't work if you have 2fa on your accounts.
Teddy G : Anytime you open a new brokerage account, etc, etc. Once open we need to connect a bank account in order to fund the new brokerage account.
This is when Plaid does its thing. When your adding your bank to say Robinhood or any other you eventually get to see photo.
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