Plaid
San Francisco, California, United States
Industry: Fintech
Region: US 🇺🇸
Founded: 2013
Expected Valuation: $13.4 billion
IPO Date: 2023 (expected)
Plaid Inc.
Key Company Facts
| Founded | 2013 |
| Headquarters | San Francisco, US |
| Sector | Finance |
| Industry | Fintech/Financial Services |
| Founders | Zach Perret and William Hockey |
| Number of employees | 1,200 (as of 2023) |
| IPO Date | 2023 expected, but delayed |
| Number of investors | 6 |
| Total funding | $690.3 million USD |
| Valuation estimate | $13.4 billion USD |
Company Overview & History
Plaid Inc., a financial technology company, was founded in 2013 by Zach Perret and William Hockey. The company is headquartered in San Francisco, California, and offers a platform that enables applications to connect with users’ bank accounts.
Their services are primarily used for account linking, balance checks, identity verification, and income validation.
Plaid has grown significantly since its inception and is currently used by over 7,000 fintech services across seven countries including the US, Canada, UK, France, Spain, Ireland, and the Netherlands.
In the early years, Plaid raised significant funding from investors such as Spark Capital, Google Ventures, and New Enterprise Associates, culminating in a $425 million Series D round in 2021 at a valuation of $13.4 billion.
In 2020, Visa announced plans to acquire Plaid for $5.3 billion, a deal later abandoned due to opposition from the United States Department of Justice, citing data privacy and antitrust concerns.
Financial Performance
As of 2020, Plaid reported a revenue of $170 million. The company has seen significant growth in valuation, starting with a valuation of $2.65 billion in 2018, which rose to $13.4 billion in 2021.
While Plaid was rumored to be a potential IPO candidate in 2022, the company’s plans to go public were delayed due to shifting economic conditions, including high inflation and rising interest rates, which impacted demand for high-flying tech unicorns.
Revenue
| Year | Revenue (USD) |
|---|---|
| 2020 | $170 million |
| 2021 | $250 million |
Business Model
Plaid operates by providing a secure and user-friendly platform for individuals and businesses to connect their financial accounts with various fintech applications.
Their suite of APIs allows applications to interact with bank accounts for a variety of purposes, including account linking, balance checking, and identity verification. This business model has allowed Plaid to become the backbone of many fintech services, with over 7,000 digital financial services built on their platform.
The company generates revenue by charging these fintech applications for use of their APIs. As the fintech industry continues to grow and more applications and services seek to integrate financial data, Plaid’s comprehensive and secure platform has positioned it as a key player in the market.
Estimated Valuation
| Year | Valuation (USD) |
|---|---|
| 2018 | $2.65 billion |
| 2021 | $13.4 billion |
Risk Factors
Plaid, like any other fintech company, faces several risk factors that could impact its growth and profitability. The first risk is related to data privacy and security.
Plaid’s business involves handling sensitive financial data, and any data breaches or unauthorized access could damage its reputation and user trust, leading to potential legal and financial consequences.
The second risk factor is regulatory scrutiny. As evidenced by the failed Visa acquisition, Plaid is subject to significant oversight by regulatory bodies, especially in the areas of antitrust and data privacy.
Changes in regulations or heightened scrutiny could potentially impact Plaid’s operations and growth strategy.
Thirdly, Plaid’s success is closely tied to the overall health of the fintech industry. Any economic downturn or decline in the fintech sector could impact the demand for Plaid’s services. Finally, Plaid also faces risks related to competition. The fintech space is highly competitive, and Plaid’s success depends on its ability to continue to innovate and differentiate its offerings.
Market Opportunity
Despite these risk factors, the market opportunity for Plaid is significant. The global fintech market is expected to grow substantially in the coming years, driven by the increasing adoption of digital payments, the rise of digital banking, and the growth of other fintech services.
As a critical infrastructure provider for many of these services, Plaid is well-positioned to capitalize on this growth.
Furthermore, Plaid’s international expansion represents another significant market opportunity. With its services currently available in seven countries, Plaid has the potential to tap into the growing fintech markets around the world.
Competitors
- Yodlee
- Tink
- MX Technologies
- Finastra
- Fiserv
- FIS
- Stripe
- Open Bank Project