Let’s Look How Plaid Looks Set to Be Valued at $15 Billion
Plaid is currently in the midst of a volatile fundraising drive that could be worth up to $15 billion, according to investors. This is roughly three times the $5.3 billion valuation that Visa gave it before the failed merger.
Preparations for the current funding round continue, as reported by The Information but not yet confirmed by Plaid, as the startup’s employees are batting away investor interest in its shares.
Ever since the Plaid-Visa deal hit the headlines in early 2020, the US fintech company has been getting a lot of VC attention.
According to Business Insider, investors keen to take a slice of Plaid’s growing valuation are offering as much as $1,200 per share of the company’s stock.
That’s more than four times what the company’s possible acquirer Visa was willing to pay back in January 2020. And such a share price pushed Plaid’s valuation to $20 billion.
A Flurry of Interest in Plaid
Four former employees confirmed that they were being “flooded” with messages from family offices and private equity brokers asking them to buy their shares. One Plaid alumnus said it made it “hard for them to know who was on the other side of the deal”.
“Everyone who has Plaid on LinkedIn who is no longer there gets a message,” a former employee told BI.
Former Plaid employees now share information about the bid with each other in a private Slack group dedicated to Plaid alumni.
Current employees who own Plaid shares can sell those shares in secondary market deals. However, they cannot sell their shares to a third party without first offering to sell them back to Plaid.
Alternatively, employees can go down the forward trading route. This way, in the event of a liquidity event – such as a takeover, or an initial public offering – the employee pledges the shares to the buyer.
Back in November, when the US Department of Justice first prosecuted the Plaid-Visa merger on competition grounds, several venture capital (VC) backers of the startup began receiving texts, emails and phone calls from other investors asking to buy their shares.
The offers then intensified after it was confirmed this month that the startup had parted ways with Visa. Although, according to The Information, no investors have sold out yet.
One venture capitalist has received 12 calls in just one week. The share offer is sitting at around $1,000 per share, roughly the same value as what was pitched to former employees.
Behind Plaid’s Value
Since the Plaid-Visa deal hit the headlines in early 2020, US fintech companies have received a wealth of venture capital interest. Fintech startups raised $3.8 billion more last year than in 2019, according to PitchBook data.
When Visa first priced Plaid, it doubled the startup’s previous private market valuation and multiplied its 2019 revenue by 52 – which suggests about $100 million in revenue.
A former Plaid employee told BI that “epidemics are the greatest thing to happen to Plaid’s business”.
In 2020, Plaid added around 1,400 clients – bringing its total to 4,000. Clients include Varo, TransferWise, Acorns, Venmo and Coinbase. This is a 60% jump.
Prior to Visa’s bid for Plaid, the startup had raised $300 million from investors such as NEA, Spark Capital, GV, Andreessen Horowitz and Felicis Ventures – as well as Visa and its rival Mastercard.
Plaid’s value is likely to continue to rise while the Federal Reserve continues to enforce near-zero interest rates.