Fintech Plaid will not go public in 2025, raises $575 million

Plaid, a fintech that facilitates data sharing between financial applications and banks, confirmed it would not be pursuing an anticipated IPO this year. 

"While an IPO remains a milestone we're tracking toward, we have no plans to go public in 2025," a spokesperson for the company told American Banker.

The news comes in light of Plaid's recent fundraising announcement Thursday that the bank data aggregator raised $575 million at a $6.1 billion valuation. The round was led by Franklin Templeton along with Fidelity Management and Research as well as previous Plaid investors like NEA and Ribbit Capital. 

Zach Perret, Plaid's CEO and co-founder, wrote in a blog post Thursday the funding would be used to cover employee tax withholding obligations from the conversion of expiring restricted stock units to shares as well as provide liquidity to its current team through an employee tender offer. The post did not outline how much capital was going to each.

Perret said the past year was "record-setting" for the company's revenue and led to a return to positive operating margins as well as a "meaningful increase" in the number of companies and markets that use it. 

"This fundraise comes on the heels of a substantial growth year, which saw a meaningful expansion in our product suite and a big upswing in the number of enterprises building with Plaid," Perret wrote.

The new valuation is less than half of the $13.4 billion Plaid was pegged at four years ago when it raised $425 million in a Series D funding round led by Altimeter Capital.

Payments

Why Circle's IPO timing is advantageous

Even though it's coming during a volatile period for the markets and economy, the cryptocurrency company's planned listing puts pressure on rivals and regulators.

By John Adams

April 2

Plaid's data transfer network allows fintech apps like Venmo and Chime to connect to bank accounts and offer banking services. Users of these fintech apps share their bank login credentials with Plaid who then bridges the funds. In the post Perret said more than one in two Americans have used Plaid to date.

Launched in 2013 by Perret and William Hockey, the San Francisco-based private company now operates in seven countries. Plaid rolled out an instant payment feature in 2023, allowing businesses to send loan payments, wages and payout insurance. 

Plaid previously expanded its reach to focus on fraud prevention and detection with increased identity verification and anti-money-laundering initiatives. Last year it introduced a new feature that uses artificial intelligence to give a full overview of prospective borrower's cash flow. 

"We are excited for the years ahead," Perret wrote in the post. "Plaid has evolved from a business solely focused on bank linking, into a suite of data analytics products that are essential to financial services and adjacent markets. Whether it's signing up new users, fighting fraud, enabling bank payments, or making underwriting decisions, our network is core to the way that our customers run their businesses and consumers run their financial lives."

Perret noted the financial services industry was still in the "early stages" of its transformation and said he was optimistic about what was coming. 

While the most recent valuation is below its April 2021 figure, it is about 15% more than when Visa in 2020 announced plans to acquire Plaid for $5.3 billion. The deal was later abandoned after the U.S. Department of Justice sued to block the move on antitrust grounds. Then-Visa CEO Alfred Kelly had stated the acquisition was an "insurance policy" by the company to curtail a "threat to our important U.S. debt business."

Plaid has previously faced lawsuits for alleged data privacy violations. In 2022 it launched a permissions manager product allowing financial institutions to create portals for consumers to see and shrink the list of apps that have access to their account information.