Introduction to Plaid’s Recent Funding

Plaid, a fintech company that connects bank accounts to financial applications, has confirmed to TechCrunch that it has sold approximately $575 million worth of common stock at a post-money valuation of $6.1 billion.

Valuation and Market Context

This valuation is significantly lower than the $13.4 billion Plaid was valued at when it raised a $425 million Series D in April 2021. A spokesperson for the company acknowledged the decrease, attributing it to the contraction of multiples across the market. Higher interest rates have led to lower valuations for many startups that last raised funds at the top of the high cycle in 2021.

Comparison to Previous Valuations

Despite the decrease, Plaid’s new valuation is about 15% higher than the $5.3 billion Visa was going to pay for the company before the acquisition deal fell apart in January 2021 due to regulatory concerns.

Plans for IPO

Plaid will not go public in 2025, but the company continues to track towards this milestone. In October 2023, Plaid named former Expedia exec Eric Hart as its new chief financial officer, which drew attention due to the potential for an IPO.

Current Financial Situation

Today, the company maintains that it is "well-capitalized." A spokesperson stated, "Plaid’s business is in a great position, and we’re optimistic about the opportunity ahead."

Recent Funding Round

Franklin Templeton led the "oversubscribed" raise, which also included participation from new backers Fidelity Management and Research, BlackRock, and others, in addition to existing investors NEA and Ribbit Capital. The transaction was characterized as "not a Series E," but rather a sale of common stock.

Use of Funds

The proceeds of the round will be used to address employee tax withholding obligations related to the conversion of expiring restricted stock units (RSUs) to shares and to offer some liquidity to its current team via an employee tender offer. CEO and co-founder Zach Perret stated that the majority of the secondary sale was going toward the conversion of the RSUs that will be expiring in the coming years.

Business Performance

This raise comes on the heels of what Perret described as a "record-setting year on revenue, a return to positive operating margins, and a meaningful increase in the companies and markets" Plaid serves. Revenue grew over 25% in 2024, and the company is approaching "sustained profitability."

Expansion of Offerings

Founded in 2012, Plaid has expanded its offerings to include lending, identity verification, credit reporting, anti-fraud, and payments, in addition to its core service of connecting consumer bank accounts to financial applications.

Growth in Enterprise Sector

Being a multi-product company has led to traction beyond the traditional fintech customers it started out serving. President Jen Taylor stated that enterprise and traditional financial institution growth was "starting to outpace the rest of its business." Plaid saw a significant upswing in the number of enterprises it serves in 2024.

Key Customers and Goal

The company counts Citi, Robinhood, H&R Block, Invitation Homes, GoFundMe, Zillow, and Rocket as "key customers." Perret wrote, "Our goal is to build software that makes the financial system easier and better for everyone. Our products are the bedrock upon which many of the most well-known financial brands are built – companies like Affirm, Chime, Robinhood, and SoFi."

Conclusion

Plaid has raised about $1.3 billion in funding over its lifetime and currently has 1,200 employees across the United States, Canada, the United Kingdom, and the EU. With its recent funding and growth in the enterprise sector, Plaid is well-positioned for continued success in the fintech industry.