Plaid (company)

Plaid was founded in 2013 by Zach Perret and William Hockey.[12] The pair originally attempted to build consumer financial management products, including budgeting and bookkeeping software.[13] When confronted with difficulties in connecting bank accounts required for these tools, they decided to pivot their core business focus to a unified banking API.[14]

Plaid builds a data transfer network that powers Fintech and digital finance products. From the consumer side, this means they allow common apps such as Venmo and Chime to offer banking services without having to develop all the infrastructure themselves.[15]

In October 2020, Plaid announced the "all-new Plaid Link" to reduce the steps necessary to connect financial products.[16]

In late 2013, Plaid raised a $2.8M seed round from Spark Capital, Google Ventures, and New Enterprise Associates. In 2014, they raised $12.5M from New Enterprise Associates.

On December 11, 2018, the company announced a $250 million Series C round with a valuation of $2.65 billion. The funding round was led by Mary Meeker, with Andreessen Horowitz and Index Ventures joining as new investors. Former backers Goldman Sachs, NEA and Spark Capital also participated.[17] It was later revealed by Plaid that both Visa and Mastercard had invested in the round.[18]

In January 2019, Plaid acquired competitor Quovo for $200 million.[19]

On January 13, 2020, Plaid announced that it had signed a definitive agreement to be acquired by Visa for $5.3 billion.[20][21] The deal was double the company's most recent Series C round valuation of $2.65 billion,[22] and was expected to close in the next 3–6 months, subject to regulatory review and closing conditions. According to the deal, Visa would pay $4.9 billion in cash and approximately $400 million of retention equity and deferred equity,[23][24] according to a presentation deck prepared by Visa.[25]

Visa CEO Al Kelly described the acquisition as an "insurance policy" to neutralize a "threat to our important US debit business."[26]

On November 5, 2020, the United States Department of Justice filed a lawsuit seeking to block the acquisition, arguing that Visa is a monopolist trying to eliminate a competitive threat by purchasing Plaid. Visa said it disagrees with the lawsuit and "intends to defend the transaction vigorously."[27][28]

On January 12, 2021, Plaid announced the proposed merger agreement had been officially terminated almost exactly a year after its initial public announcement of the deal.[29]

The company has faced controversy for scraping user data, impersonating bank login screens, and not properly disclosing the privacy risks associated with the service.[30] TD Bank filed a lawsuit against Plaid in 2020 accusing the company of trying to "dupe" its users.[31]