Plaid Raised $575 Million In A Secondary Share Sale

Plaid, an American open banking platform that is building a data transfer network that powers fintech and digital finance products, recently raised $575 million through a secondary share sale. 

Following the move, the platform’s new valuation is now $6.1 billion, which is a considerable drop to $13.4 billion which was its worth in 2021.

The funding round that allowed the platform to raise $575 million was joined by a number of major names in the financial industry, including BlackRock, Fidelity Management & Research Co., Ribbit Capital, NEA, and Franklin Templeton. 

The round also gave some of Plaid’s employees a chance to cash out restricted stock that was set to expire at the end of 2025. 

Plaid’s Valuation Does Not Reflect Its Business Success And Revenue

Commenting on the new development, the company’s CEO, Zach Perret, stated that the firm saw a substantial growth in the last year. However, it still went through a major valuation drop, which is simply the part of wider market conditions.

He insisted that the platform’s business is much stronger than what the company’s valuation would suggest and that revenue has grown quite substantially. “The profitability of the business has gotten quite a lot better, and yet we are impacted by market multiples, as many companies are,” he added.

Perret also noted that holding an IPO is still a plan that the company has for the future, but before that, it intends to focus on a lot of internal work. “We’re not ready, which is why we didn’t consider it right now.”

Plaid was founded in 2012, and ever since then, its focus has been on helping consumers connect their financial accounts from more than 12,000 providers to over 8,000 fintech providers. As mentioned, in 2021, it reached a valuation of $13.5 billion, which came several months after the firm was forced to abandon a $5.3 billion takeover by Visa. At the time, the US Justice Department blocked the move over competition concerns.