Plaid is one of fintech’s quietest and most unassuming success stories. Since its founding in 2013 by Zach Perret and William Hockey, the company has raised over $734 million in funding, serves 11,000 banks as clients, and boasts a valuation of over $13 billion. Plaid specializes in providing the infrastructure that allows apps to connect with users’ bank accounts, facilitating services like account verification and transaction histories. This pivotal role in the fintech ecosystem has cemented Plaid’s reputation as a powerhouse in the industry.
Plaid’s valuation has seen substantial growth over the years, with significant funding rounds in December 2018, April 2021, and August 2021 contributing to its impressive market valuation of over $13 billion as of January 2024.
How to Buy Plaid Stock?
Currently, Plaid is a private company, which means its stock is not available on public exchanges. However, investors interested in buying Plaid stock have a few potential avenues:
Secondary Markets: Platforms like EquityZen and Forge Global sometimes offer shares of private companies, though availability is not guaranteed.
Pre-IPO Shares: Accredited investors might get opportunities to buy pre-IPO shares through private equity firms or special investment vehicles.
Future IPO: Keep an eye on news about Plaid going public. Investing at the IPO stage can provide early access to publicly traded shares.
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Invest in Plaid’s Partners and Investors:
While Plaid itself is not publicly traded, several of its major investors are. Investing in these companies offers indirect exposure to Plaid’s growth and success.
1. American Express Company:
American Express (AXP) has invested in Plaid twice, first in the Series B round in 2016 and again in the Series D round in August 2021. This consistent investment underscores AXP’s confidence in Plaid’s potential and strategic alignment with their financial services.
2. Goldman Sachs:
Goldman Sachs (GS) participated in Plaid’s Series B and Series C funding rounds, which raised $44 million in 2016 and $250 million in 2018, respectively. Goldman’s investment highlights its strategic interest in fintech innovation and infrastructure.
3. Mastercard and Visa:
Both Mastercard (MA) and Visa (V) invested during Plaid’s Series C round in December 2018 and re-invested in September 2019. Their continued investments reflect the significant value they see in Plaid’s technology, which complements their payment processing services.
How Does Plaid Generate Revenue?
Plaid generates revenue primarily through service fees charged to its clients for using its API. These fees vary based on the volume and type of data processed. Additionally, Plaid offers premium products that provide more advanced functionalities and data insights, which come at higher price points. This diversified revenue model ensures a steady stream of income from various financial institutions and fintech apps.
Plaid’s revenue has grown consistently, reaching an estimated $325 million in 2022. This growth is a testament to its expanding client base and the increasing demand for its financial data services.
Major Competitors of Plaid:
Plaid operates in a competitive market, with several notable rivals:
1. SoFi Technologies:
SoFi generated $2 billion in the last 12 months and has a market capitalization of $8 billion. It offers a wide range of financial services, including loans, investments, and banking, which overlap with some of Plaid’s services.
2. PayPal Holdings:
PayPal (PYPL) has generated $29.1 billion in revenue over the last 12 months and has a market capitalization of $65.8 billion. Its extensive payment processing network and digital wallet services make it a formidable competitor.
3. Block Inc:
Block (SQ) brought in $20.8 billion in sales over the last year and is worth $42.7 billion. Known for its Square payment processing system and Cash App, Block provides services that directly compete with Plaid’s connectivity solutions.
Conclusion:
While Plaid is not yet available for direct public investment, there are various ways to gain exposure to its growth, from secondary markets to investing in its major backers. Plaid’s revenue generation through service fees and premium products, along with its strategic partnerships, position it as a key player in the fintech landscape. As it continues to grow and innovate, keeping an eye on Plaid’s journey will be essential for any fintech-savvy investor.
