Plaid co-founders William Hockey and Zach Perret
Source: Plaid
Payments giant Visa is buying Silicon Valley start-up Plaid in a deal worth $5.3 billion, the companies announced Monday.
Plaid’s API software, often referred to as the “plumbing” behind fintech companies, lets start-ups connect to users’ bank accounts. It’s well-known among financial technology developers, but the average person interacting with it most likely wouldn’t recognize the name. High-profile Plaid customers include popular peer-to-peer payment app Venmo, mobile investing app Robinhood and cryptocurrency exchanges Coinbase and Gemini.
As of December, Plaid said 25% of people in the United States with bank accounts have connected to the fintech company through an app. Visa and rival Mastercard were early investors in the start-up, along with the venture arms of Citi and American Express.
Goldman Sachs — also an early investor — was the exclusive advisor on the deal, according to a person familiar with the negotiations.
Plaid raised $250 million in a 2018 Series C funding round that launched its valuation to $2.7 billion. It also added widely followed venture capitalist Mary Meeker to the board of directors.
In a call with investors Monday, Visa CEO Al Kelly said Plaid has seen a compound annual growth rate of roughly 100% since 2015. Kelly said the Visa deal will help expand its own total addressable market and relationships with fintech companies, and accelerate Plaid’s growth.
“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.”
Visa said the deal has the ability to add as much as 100 basis points to the company’s net revenue growth by 2021.
The Wall Street Journal first reported the Visa acquisition.
Plaid has grown steadily with its list of customers since it launched in 2013. The company says it integrates with more than 10,000 banks and connects to roughly 20 million consumer accounts. While it does not give specific numbers or a full list of companies, Plaid said its customer base doubled from 2017 to 2018 and has expanded to the U.K. and Canada.
Plaid CEO Zach Perret said joining Visa would help the start-up continue to scale its products.
“We’ll be able to lean on their brand, resources, and international footprint to benefit our customers, our partners, and the markets we serve,” Perret said in a blog post.
