Plaid, a company known for connecting bank accounts to financial applications, has confirmed to TechCrunch that it sold approximately $575 million worth of common stock, valuing the company at $6.1 billion post-money. This valuation is less than half of the $13.4 billion valuation Plaid was assigned during its $425 million Series D funding round in April 2021, led by Altimeter Capital. A spokesperson from Plaid cited a market-wide contraction as the reason for the decreased valuation.
The decrease in valuation aligns with a broader trend where many startups have seen their valuations fall due to increased interest rates, following their peak in 2021. Despite the reduced valuation, Plaid’s current worth is about 15% higher than the $5.3 billion that Visa had planned to pay for the company before that acquisition was called off in January 2021 due to regulatory challenges.
Although Plaid will not go public in 2025, the company is reportedly working towards an IPO. In October 2023, Eric Hart, formerly of Expedia, was appointed as the company’s new chief financial officer, signaling Plaid’s long-term IPO aspirations. The company asserts it is “well-capitalized” and remains optimistic about future opportunities, according to a spokesperson.
The recent fundraising effort was led by Franklin Templeton, with participation from new investors such as Fidelity Management and Research and BlackRock, alongside existing investors NEA and Ribbit Capital. Plaid described this move not as a Series E round but as a sale of common stock. The raised capital will primarily address employee tax obligations associated with the conversion of expiring restricted stock units (RSUs) and provide some liquidity to employees through a tender offer. While specifics were not disclosed, most of the capital will go towards RSU conversion, according to a company spokesperson.
Restricted stock units, typically issued as part of employee compensation, involve vesting based on tenure or performance milestones. The fundraising follows a strong year for Plaid, characterized by record revenue, positive operating margins, and significant growth in its market reach. Although specific revenue figures were not shared, the company reported a revenue increase of over 25% in 2024, moving towards sustained profitability. New products accounted for more than 20% of Plaid’s annual recurring revenue in 2024, with growth compounding at 93% annually.
Plaid, founded in 2012, initially focused on connecting consumer bank accounts to financial apps but has since expanded to include services like lending, identity verification, credit reporting, anti-fraud measures, and payments. This growth has led to increased traction with enterprise clients and traditional financial institutions. President Jen Taylor noted in an interview with TechCrunch that growth in these sectors is surpassing the rest of Plaid’s business. In 2024, the company experienced a significant increase in the number of enterprises it serves, with notable clients including Citi, Robinhood, H&R Block, Invitation Homes, GoFundMe, Zillow, and Rocket.
CEO and co-founder Zach Perret emphasized Plaid’s mission to enhance the financial system’s accessibility and effectiveness, providing foundational software for many prominent financial brands like Affirm, Chime, Robinhood, and SoFi. Plaid has raised about $1.3 billion over its lifetime and currently employs 1,200 people across the United States, Canada, the United Kingdom, and the EU.
