Plaid Raises $575M in Secondary Share Sale Amid Valuation Drop to $6.1B
Open banking leader Plaid has recently raised a significant $575 million through a secondary share sale, reflecting a drastic decrease in its valuation from $13.4 billion in 2021 to $6.1 billion. This funding round, spearheaded by prominent firms including Ribbit Capital, NEA, Fidelity Management & Research Co, BlackRock, and Franklin Templeton, marks a pivotal moment for the fintech company.
The Purpose of the Recent Funding Round
This latest funding initiative allows select Plaid employees to cash out on restricted stock that is set to expire at the end of 2025. Established in 2012, Plaid connects consumer financial accounts with over 12,000 providers to more than 8,000 fintech firms, playing a crucial role in the expanding open banking ecosystem.
Plaid’s Growth Amid Valuation Decline
Despite the substantial drop in valuation, Plaid continues to experience noteworthy growth. CEO Zach Perret emphasized that the company’s revenue and profitability have improved significantly, though the valuation decline mirrors broader market conditions. He stated,
“The reality is our business is much stronger and revenue has grown quite substantially. The profitability of our business has gotten quite a lot better, and yet we are impacted by market multiples, as many companies are.”
Future Plans and IPO Considerations
Looking ahead, an initial public offering (IPO) remains part of Plaid’s long-term strategy. However, Perret indicated that the company is not yet prepared to take that leap:
- “We still have a lot of internal work to do.”
- “We’re not ready, which is why we didn’t consider it right now.”
A Brief History of Plaid’s Valuation
Plaid’s previous valuation of $13.5 billion in 2021 came after its failed acquisition by Visa for $5.3 billion, a deal that was halted by the US Justice Department due to competition concerns in the payments industry.
Conclusion
As Plaid navigates this challenging landscape, it remains a vital player in the fintech sector. For more insights into the evolving world of open banking, check out our article on emerging trends in open banking.
For further reading on fintech investments, visit Forbes’ fintech section.
