Plaid, a leading fintech company that connects bank accounts with financial applications, has announced a successful raise of approximately $575 million from a standard stock sale, resulting in a post-money valuation of $6.1 billion.
This marks a significant decline from its previous valuation of $13.4 billion during its Series D round in April 2021. A spokesperson for the company noted that the drop is due to “the contraction of multiples across the market,” driven by higher interest rates affecting startup valuations since their peak in 2021.
Plaid’s CEO, Zach Perret, announced that the recent funding round would mainly be used to fulfil employee tax withholding obligations related to expiring restricted stock units (RSUs) and to provide liquidity through an employee tender offer. The round, led by Franklin Templeton and featuring participation from new investors like Fidelity and BlackRock and existing investors NEA and Ribbit Capital, was oversubscribed. Importantly, Plaid clarified that this transaction involved directly issuing new shares to raise capital rather than a secondary share sale.
While the company’s valuation has decreased, it still reflects a 15% increase from the $5.3 billion valuation proposed by Visa before their acquisition deal was terminated in January 2021 due to regulatory issues. Looking to the future, Plaid has indicated that it does not plan to pursue an initial public offering (IPO) in 2025. However, it remains a milestone the company is “tracking towards,” as stated by a spokesperson. The recent appointment of former Expedia executive Eric Hart as the new chief financial officer in October 2023 had previously hinted at potential IPO aspirations.
Similarly, The Hong Kong Fintech Ecosystem report by InvestHK highlights significant growth in the region’s fintech sector, driven by innovations in blockchain, digital assets, distributed ledger technology (DLT), and artificial intelligence (AI). The number of fintech companies has surpassed 1,100, which includes 175 focused on blockchain and 111 on digital assets and cryptocurrency.
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