Fast-growing startup thrills investors after acquisition at twice its private valuation
With innovative startups reinventing the fintech landscape, traditional payments companies, such as Visa, are insuring their future and broadening their vision with the acquisition of high growth brands that have come to define the modern payment space.
In a move worth $5.3 billion, Visa has announced its intention to acquire Plaid, an API software that lets start-ups connect to users’ bank accounts, helping developers share banking and other financial information more easily.
The deal, which is valued at circa double the startup’s last private valuation, comes as no surprise to investors, after early rounds saw high priced infusions from the likes of Mastercard and American Express, as well as Goldman Sachs, who are said to have acted as exclusive advisers on the deal.
Visa CEO Al Kelly said Plaid has seen a compound annual growth rate of roughly 100% since 2015. Kelly said the deal was a “long-term” play and would position Visa for the next decade. It will help expand the company’s own total addressable market and relationships with fintech companies, as well as boost Plaid’s growth, according to Kelly.
“This fits well, strategically,” Kelly said about the acquisition. “We’re excited about new businesses and the ability for this to accelerate our revenue growth over time.”
CEO Zach Perret told CNBC the Plaid team got to know Visa through its initial strategic investment, which was a “jumping off point for a series of conversations” leading up to the deal. Perret, who co-founded the company with a former Bain colleague William Hockey, said the Visa brand would help Plaid scale its products and global footprint.
“We feel fortunate to have been there for the early days of fintech, and to have helped develop that ecosystem,” Perret said. “This represents an important milestone, and the ability to work with Visa to make our products products much bigger and better — both domestically and internationally.”
Since its 2013 launch, Plaid has seen steady, incremental growth – integrating with more than 11,000 banks and connecting to more than 20 million consumer accounts and expanding services into the UK and Canada.
Data from Plaid reveals that 25% of people in the United States with bank accounts have connected to the fintech company through an app, while notable Plaid customers include peer-to-peer payment app Venmo, mobile investing app Robinhood and crypto exchanges Coinbase and Gemini.