Fintech Startup Plaid raised $575 million in a new funding round, with half its peak in 2021, at $6 billion, which is $13.4 billion.
The new round will provide a way for employees to acquire stock, with restricted stock units expiring at the end of the year. This is the latest in a series of secondary rounds that provide liquidity to staff from well-known private, high-tech companies that are publicly available.
The funding was led by new investors such as Franklin Templeton, Fidelity and BlackRock. Longtime supporters Nea and Ribbit Capital also participated in the round.
Founded in 2012 by William Hockey and Zachary Perret, San Francisco-based Plaid provides the underlying infrastructure that strengthens much of today’s digital financial system. It enables businesses from scrap fintech startups to major banks to build services that allow users to connect to their financial accounts, share their data securely, and manage them more easily. Its APIs are behind famous apps such as Venmo, Robinhood, and Coinbase.
In an interview with CNBC, Pellett said the startup 10 years ago recorded record revenues and reached a positive operating margin over the past year. He didn’t share accurate numbers, but said the new ratings reflect the wider market situation, not a slower business.
“The reality is that our business is much stronger and our revenues are increasing significantly,” Pellet told CNBC. “Businesses are profitable very well, but like many companies, we are affected by multiples of the market.”
The IPO is still on the table, but not yet.
“The IPO will definitely be on our path for the next few years. We have not assigned a specific timeline,” Pellett said. “We still have a lot to do and we’re not ready, so we haven’t considered it right now.”
This is not a unique situation. Companies like Ramp, Databricks, Openai and Stripe have all recently raised secondary rounds, providing some employees with a way to sell fairness in the private market. It’s not appealing to the public, especially when recent IPOs are performing poorly. Last week, CoreWeave’s debut floped and was hesitant.
When asked about the IPO outlook, Pellet said, “Volatility will definitely be one of the key factors.” The company has not set a timeline.
The Plaid has been running a roller coaster since its launch in 2013. As reported in 2O20, Visa was planning to acquire the company for $5 billion, but regulators blocked the transaction. A year later, Plaid raised at a $13.4 billion valuation at its tech funding peak before the Fed began hiking interest rates.
The company is behind many of the apps consumers use to manage their money. Its API connects a user’s bank account to services such as Venmo, Robinhood, Coinbase, and more. Over time, it will expand to bill payments, data analysis, fraud prevention, and more. It also works with major banks.
Pellet said cybersecurity is one of the fastest growing regions as AI-fuel financial fraud continues to rise.
“We’ve been leaning towards building tools to combat deepfakes and a lot of AI-driven financial fraud,” he said. “Unfortunately, this is a huge market opportunity. It’s something we really want to be smaller. But it was a field of growth.”
With Windows in IPOs still vague and investor sentiment unstable, Plaid’s move shows how late startups are recalibrated.
The founder of plaid
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