Open banking giant Plaid has secured $575m in a secondary share sale that has seen its valuation plummet from $13.4bn in 2021 to $6.1bn.
The funding round was led by Ribbit Capital, NEA, Fidelity Management & Research Co, BlackRock, and Franklin Templeton, according to Finextra.
The sale enables some Plaid employees to cash out restricted stock set to expire at the end of 2025.
Founded in 2012, Plaid connects consumers’ financial accounts from over 12,000 providers to more than 8,000 FinTech firms. The company plays a crucial role in the open banking ecosystem, facilitating seamless integrations for a variety of financial applications.
The fresh funding comes at a time when Plaid continues to experience substantial growth, despite the valuation drop. CEO Zach Perret stated that the firm’s revenue and profitability have improved significantly but acknowledged that the decline in valuation is reflective of broader market conditions.
“The reality is our business is much stronger and revenue has grown quite substantially. The profitability of business has gotten quite a lot better, and yet we are impacted by market multiples, as many companies are,” he said.
Although an IPO remains in the company’s long-term plans, Perret suggested that Plaid is not yet ready to take that step. “We still have a lot of internal work to do. We’re not ready, which is why we didn’t consider it right now,” he added.
Plaid was previously valued at $13.5bn in 2021, a figure that followed its failed $5.3bn acquisition by Visa. The deal was scrapped after the US Justice Department intervened due to concerns over competition in the payments industry.
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