Visa Inc. (Visa), an American multinational financial services corporation, announced on Monday, January 13, 2020, that it made an acquisition deal of $5.3 billion with the Silicon Valley startup, Plaid. The startup company, under the deal, is receiving double the company’s valuation of the last year. Plaid, after raising around $250 million for Series C funding in 2018, was valued at $2.7 billion at the end of the last year.
Plaid’s Existing Financial Business
A 6 and half years old US-based startup, Plaid provides financial services using through its technology technologies and applications that connect several users’ bank accounts. The fintech startup provides an application programming interface (API), a software that connects consumers, traditional financial institutions, and developers.
Plaid has its widespread operations that connect more than 11,000 banks by facilitating a financial platform for more than 20 million consumer accounts. Expanding its operations across the UK and Canada, the number of its customers have jumped to double from 2017 to 2018. The startup is linked up with the customers from various services providers including peer-to-peer payment app Venmo, mobile investing app Robinhood, and cryptocurrency exchanges Coinbase and Gemini.
As of December 2019, as the startup officials revealed that one in four people in the US has access to its services by using the company’s app. Along with the other ventures with the giant companies such as Citibank and American Express, Visa and its rival Mastercard have invested in the fintech startup.
Acquisition Deal and Statements from CEOs
The Wall Street Journal first reported the Visa acquisition of Plaid and said, “The deal has the potential to add as much as 100 basis points to the Visa’s net revenue growth by 2021.” Goldman Sachs was the exclusive advisor on the deal. In a talk with investors Monday, Visa CEO, Al Kelly stated, “Plaid has seen a compound annual growth rate of roughly 100% since 2015.”
Kelly further asserted that the deal was aimed at Visa’s ‘long-term’ strategy for the next decade and would help in expanding the company’s market globally. Referring to the acquisition deal, Kelly said, “This fits well, strategically. We’re excited about new businesses and the ability for this to accelerate our revenue growth over time.”
Upon finalizing the deal, the co-founder and CEO Zach Perret released a statement saying, “Joining forces with Visa, a brand that is trusted by billions of consumers, and financial institutions in over 200 countries and territories, represents an incredible opportunity to continue to scale our products. We’ll be able to lean on their brand, resources, and international footprint to benefit our customers, our partners, and the markets we serve.”
Perret asserted that the deal would help Plaid for the expansion of its products and global footprint. As CNBC reported that Perret said in a phone interview, “We feel fortunate to have been there for the early days of fintech and to have helped develop that ecosystem. This represents an important milestone, and the ability to work with Visa to make our products much bigger and better — both domestically and internationally.”
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